Detroit’s Big Three carmakers and the United Auto Workers union are slugging it out over higher wages, pensions and shorter workdays as a deadline looms this week in their latest four-year round of contract negotiations. But the unseen driver in the strategies of the two sides is survival amid the shift to electric vehicles, the most fundamental retooling of the industry since the introduction of the assembly line more than a century ago. New EV and battery factories are rising, with new technology that requires new skills and fewer workers to build cars never made at scale by Detroit. The automakers face new competition from rivals with a decade and a half’s head start, who so far are wiping the floor with the Big Three—and by the look of things will continue to do so for some time to come.
The contract negotiations—which face a strike deadline at midnight Thursday—are important, but getting the transition to EVs right trumps the talks. Detroit has stumbled for long stretches of the last few decades, partly because of high labor costs. But UAW wage and benefit packages were not the main culprit. Instead, during the 1990s and 2000s, the three automakers made unstylish, inferior-quality cars that were outsold by better constructed and designed Japanese- and German-made models. Now, they find themselves wrongfooted by Tesla and Chinese EV makers, which like the Japanese and Germans before them are selling vehicles that consumers want to own. In the first six months of the year, Tesla sold about 889,000 EVs. Stellantis sold 169,000, GM 36,024 and Ford 25,709.