Why the UAW Strike Is Good News for Tesla (TSLA) Stock

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The United States witnessed labor history today as the United Auto Workers (UAW) union began a massive strike. After failing to reach new contract agreements with three leading automakers this morning, 13,000 workers stood together to send a clear message to employers. Now, Tesla (NASDAQ:TSLA) also has the opportunity to take advantage of this production disruption.

The Associated Press reports that today’s strike amounted to “one in 10 of America’s unionized auto workers.” That’s no small number. What’s more, UAW President Shawn Fain has made it clear that the strike could expand to even more plants across the country.

his mobilization is against the automotive industry’s “Big Three” companies: Ford (NYSE:F), General Motors (NYSE:GM) and Stellantis (NYSE:STLA). While this is bad news for all three, Tesla and TSLA stock actually stand to benefit.

What’s Happening With TSLA Stock?

Today marks the end of a volatile week for the electric vehicle (EV) leader. While TSLA stock is still 3% in the green for the week, it’s poised to end today’s session in the red even as the UAW strike continues to trend.

This isn’t necessarily surprising. Specifically, Tesla has been struggling as speculation mounts that TSLA stock is overvalued. That issue may be causing some investors to ditch their TSLA holdings, including some billionaire investors. Still, while these arguments are valid, the new strike may be exactly the catalyst that Tesla needs.

Why? Well, the automotive strike comes at a time when the sector is focused on a vital transition away from gasoline-powered cars to EVs. While the “Big Three” have doubled their EV production efforts in recent years, Tesla has remained the undisputed leader of the race, due primarily to its head start.

Of course, companies like Ford and General Motors have made significant progress recently, cutting into Tesla’s market share. But now that these industry powerhouses are faced with big problems on the production line, Tesla has the opportunity to regain some ground.

The Road Ahead

Tesla isn’t the only EV producer that stands to benefit from the UAW strike. Other companies in the space, such as Lucid (NASDAQ:LCID) and Rivian (NASDAQ:RIVN), could also secure further pieces of this lucrative market. However, Tesla’s extensive resources and production facilities across the globe will give it an edge that could power TSLA stock in the coming quarter.

Until the strike is settled, Tesla stock is likely to rise — and smaller EV stocks will probably follow.

On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.