Democrat push for electric vehicles a major source of auto industry pain amid historic strike

Ford CEO called out for comments on not giving workers raises due to electric vehicle investments.

Published: September 17, 2023 11:09pm

Updated: September 18, 2023 2:35am

With financial losses and now a historic labor strike, the auto industry is feeling the brunt of its Democrat-pressured transition to electric vehicles (EV).

Ford President and CEO Jim Farley even suggested last week ahead of the United Auto Workers (UAW) strike against the Big Three automakers that his company couldn’t pay workers what they wanted because of the cost of the EV transition.

Ford announced this summer that they expect to lose a staggering $4.5 billion on electric vehicles this year, raising its estimate from $3 billion earlier in the year.

Farley's comments came in an interview on CNN's "The Lead with Jake Tapper" about weighing pay raises for employees against their impact on the transition to electric vehicles.

The strike is initially aimed at three Detroit Three factories following a failure to reach agreements over increased wages and other issues with the major American automakers.

The union began by demanding 40% raises over a four-year contract, but later lowered its demand to 36%. The union is also seeking raises to correspond to the cost of living, an end to tiered-wages for factory jobs, a 32-hour work week with 40 hours of pay and pension increases, among other things.

CNN asked Farley about the automakers' problem with the UAW demand for increased wages. 

“I just wanted to pass on a question based on something [the UAW president] told me the other day which is that over the last four years, each of the Big Three car manufacturers’ CEOs, in addition to their multimillion dollar salaries, they received on average a 40% pay increase,” Tapper said during the interview

Tapper asked why the union's request for an approximately 40% increase is "so offensive compared to the 40% raises they have given themselves?” 

Farley said that while the company wasn't opposed to wage increases in the double digit range, going to 40% would put the company out of business and he would not cut Ford's push for EVs, even though the company is expecting to lose $4.5 billion this year alone on them, according to Fox Business.

“There’s a fine line here that we won’t go past, which is we want everyone to participate in our success," Farley said. "But if it prevents us from investing in this transition to EVs and in future products like the ones we have now, like the new F-150, best-selling vehicle in the world — in the U.S., then everyone’s job is at risk if we don’t invest."

General Motors has had similar problems with the EV transition, specifically with supply chain issues and building enough electric batteries to go into the cars. 

Chief Executive Mary Barra acknowledged the problems this summer. "Our automation equipment supplier is struggling with delivery issues," she admitted.

The economics and the strike are shining a light on the fact that Joe Biden’s transition to electric vehicles will spell far fewer jobs in the industry in the future.

The Congressional Research Service warned that the transition will be painful, especially for workers, because electric cars have far fewer parts and assembly needs.

“Electric vehicle powertrains, if built domestically and not imported, would generate production employment, but fewer employees may be needed than at present because vehicle battery packs have relatively few components and are less complicated to assemble than internal combustion engine powertrains," CRS wrote. "Electric vehicles utilize a large number of electronic sensors, but these devices require little labor to produce and assemble."

That harsh reality is part of the reason why some Democrats joined Republicans in the House last week in voting to block mandates that require the end of gas vehicles.

The UAW acknowledged as much last week, acknowledging the EV transition was part of its strike strategy.

"We will not let the EV industry be built on the backs of workers making poverty wages while CEOs line their pockets with government subsidies," UAW President Shawn Fain wrote in an op-ed.

Analysts warn a prolonged strike could force a profound setback in the EV transition. 

“We believe a strike lasting longer than 4 weeks would be a body blow to the EV ambitions of GM and Ford in 1H24 and delay many aspects of this initial important EV push," WedBush Securities analysts wrote investors last week.

There has been an active effort over the past two years to push Americans to use electric cars and move away from oil and gas, mostly due to climate change concerns. 

Tapper pushed back on Farley's remarks, saying: “It’s just there have been record auto profits, bailouts by the U.S. government. These huge raises that these CEOs are giving themselves, and I just wonder, why isn't there more of a desire of the CEOs to have the workers share in the profits that are coming in to these automakers who just need to remind him they were bailed out by the U.S. taxpayer a few years ago?”

Farley clarified that Ford was not one of the automakers that got bailed out.

The strikes is affecting the Ford plant in Wayne, Mich., the GM plant in Wentzville, Miss., and the Stellantis plant in Toledo, Ohio.

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