The Inconvenient Truth about Electric Cars and the UAW

Jeff Siegel

Written By Jeff Siegel

Posted September 25, 2023

It was easily one of the most criticized public companies to have ever  traded on the Nasdaq.

And its CEO was a target for nearly every traditional car company and oil company CEO in the world.

The audacity of this guy to assume he could not only mass produce an electric car, but actually make a profit doing it.  For those who feared progress, he was a laughing stock.  The punchline of bad jokes made by old money and young fools. 

But now, boasting a net wealth so large he’s the richest man on the planet, Elon Musk got the last laugh.

Not only did he prove that consumers would buy electric cars if they were built properly, but he also proved that these cars would become so popular that they’d instigate a rapid transition from internal combustion to vehicle electrification.

An Observation of Truth

It was a little more than ten years ago, in 2010, when Tesla (NASDAQ: TSLA) first went public.

At the time, less than 300 highway-capable electric cars had been sold. 

Since then, roughly 30 million have been sold , and last week Tesla reps announced that the company had produced its 5 millionth electric car.

You know the old saying: risk equals reward. 

And Elon Musk’s success is proof of that, because there’s no doubt that he took on a massive risk launching a new electric car company, and even doing so in the aftermath of the Great Recession.

Today, Tesla is one of the most successful car companies in the world, and the most successful company building electric cars.

Because Tesla got a first mover advantage, and didn’t have to be burdened with all the baggage that legacy carmakers have collected over the years, such as antiquated manufacturing technologies, a general lack of creativity and motivation, and of course, unions, Musk was able to turn Tesla into one of the greatest success stories in the history of capitalism. 

The burden of unions is particularly interesting, because with the strikes going on right now, some union reps are counting among their complaints the transition to vehicle electrification. 


Because according to reps from Volkswagen (OTCBB: VWAGY) and Ford (NYSE: F), electric cars are estimated to require 30% less labor than internal combustion vehicles, and global consulting firm, AlixPartners, has estimates indicating electric cars will require 40% less labor than internal combustion.

This is mostly due to the fact that EVs don’t use traditional engines and transmissions, which actually require a lot of parts and skilled labor to put them together and repair.

A benefit for consumers, to be sure, but an obstacle for legacy carmakers that need to balance making money and building the cars that consumers are demanding now and in the future.

While I’m not an anti-union guy, necessarily, if the unions fight the transition to vehicle electrification because such a transition would result in less membership, they will end up shooting themselves in the foot.

The future IS electric, and if the unions have any desire to exist in a post internal combustion world, they’re going to have to adapt to this reality.  

Eventually, every new technology becomes old technology, and then falls out of favor.   That’s just how it is. 

We didn’t stop ourselves from moving from the horse and buggy to the internal combustion vehicle because it was going to put buggy manufacturers and horse feed companies out of business. 

We didn’t stop ourselves from moving from switchboard operators to automated telephone systems because all those switchboard operators would have to find new jobs.

And we’re not going to stop the transition to electric vehicles because the production of those vehicles requires less labor.

I don’t say this to be crass or unfeeling.  It’s merely an observation of truth.

And here’s another observation of truth …

Investors who don’t accept that this transition is happening, and continue to bet against electric vehicles, are going to miss out on one of the greatest investment opportunities of a lifetime. This is particularly true when it comes to getting exposure to all the companies that are providing the metals and minerals that are required to build electric cars.

For my money, I remain extremely bullish on copper and lithium, and maintain that Lundin Mining (TSX: LUN) and Albemarle (NYSE :ALB) are two of the best ways to play the increased demand for copper and lithium that we will see throughout the rest of the decade. 

And there will be more, too, which I will be adding to the portfolio in the coming weeks. 

So keep an eye out for those.

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