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Detroit is on strike. As of last Friday, the United Auto Workers of America, representing approximately 40% of all industry employees in the US, is challenging the “big three” car manufacturers – GM, Ford, and Stellantis (formerly Chrysler) – in an effort to include electric vehicle workers within the union.
Auto industry strikes hold significant importance, and this one is no exception.
The unions are not merely fighting for monetary gains. This battle could determine not only the future of the clean energy transition in the US but also potentially impact the outcome of the 2024 presidential election and the future of the Democratic party. It is a worthy, yet highly risky, fight.
The first aspect to consider is the location and process of electric vehicle production. Although President Joe Biden’s initial climate change executive order and the climate stimulus bill supported labor unions, the final Inflation Reduction Act, a climate bill, favored “domestic” labor rather than explicitly requiring union labor.
This change was influenced not only by pushback from Democratic Senator Joe Manchin of West Virginia, who played a crucial role in passing the IRA, but also by intense lobbying from foreign multinational corporations. Many of these corporations aim to leverage the American South, where numerous new EV jobs are being created, due to lower labor and environmental standards in those states, effectively using it as their own personal China.
The fact that this race to the bottom is occurring within the United States is a key reason behind the strike. The UAW wants to ensure that workers involved in the production of electric batteries and other components for EVs receive the benefits of union representation.
For the union, this is a battle of great significance. The transition to EVs is expected to significantly reduce the number of jobs in the automotive sector in the short term, as the assembly line workforce required for manufacturing internal combustion engine vehicles is not needed for the same extent in EV production. Ford CEO Jim Farley stated in an interview with the Financial Times in 2022 that the transition to EVs could result in a 40% reduction in the workforce.
Some individuals, even those who advocate for workers’ interests, might argue, “Why does it matter where the jobs are located as long as they are in the US?” However, there are significant political reasons why it does matter.
This brings us to the second point, which is the potential impact on the 2024 presidential election.
Union membership in the US has declined significantly over the past few decades, but it still constitutes a crucial part of the Democratic voting bloc. The support of union labor in swing states like Pennsylvania was one of the reasons Donald Trump was elected in 2016.
Since then, union officials have been working hard to educate members about the former president’s failure to fulfill his promises to workers. However, if Biden is unable to resolve the strike, Trump could benefit, and American democracy would suffer.
Therefore, I am concerned about the ambitious nature of these strikes. On one hand, it is understandable that autoworkers, who made significant concessions during the 2008 financial crisis, desire a larger share of the substantial profits generated by the big three, which have increased by 92% over the past decade. Last week, Biden himself stated that “record corporate profits” necessitate “record contracts” for workers. If Biden is forced out of office in 2024, it won’t only be American unions that lose.
Regardless of the outcome, these strikes and the overall transition to electric vehicles are hastening a moment of reckoning for the Democratic party. Wealthy progressives on the coasts, who predominantly drive Teslas that constitute 60% of all EVs sold in the US, often prioritize addressing climate change over labor rights. However, if the Republican party nominates Trump and he wins, both the planet and workers will be at risk.
How can Biden reconcile this economic and political conundrum? One possibility is to expand the focus beyond the UAW’s demands and instead emphasize the need for a broader global coalition centered around carbon pricing and labor standards.
While some may argue that China’s violation of World Trade Organization rules by flooding Europe with EVs is less important than increasing the availability of affordable EVs, the harsh political reality is that if Western countries are seen as betraying their own workers, there will be a stronger and broader shift towards autocratic populism akin to Trump’s policies.
An alternative approach would be for the US and Europe to collaborate and establish joint labor and environmental standards for EV production. This would help prevent a race to the bottom, whether between China or amongst Western countries, and impose tariffs on vehicles that do not adhere to these standards.
These standards should consider the overall carbon footprint of production. For instance, it is crucial to assess the use of coal-powered electricity and forced labor in generating clean energy inputs, regardless of whether they originate from China or elsewhere.
The stakes are too high for another race to the bottom.
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