General Motors (NYSE:GM) and Ford (NYSE:F) are laying off about 500 additional workers as the United Auto Workers union strike continues to hit their operations. Separately, the two automakers, along with Stellantis (NYSE:STLA), could face $10.5 billion in fines under a proposal by U.S. President Joe Biden’s administration to increase fuel economy standards, Reuters reported.
UAW Strike Triggers More Layoffs
On Monday, Ford said that it would furlough 330 workers at its Chicago Stamping and Lima, Ohio engine plants. Meanwhile, General Motors is laying off 130 workers at its Parma, Ohio Metal Center and 34 employees at its Marion, Indiana Metal Center.
The move comes after the UAW expanded its strike on Friday to General Motors’ Lansing, Michigan plant and Ford’s Chicago assembly plant, but spared Stellantis following last-minute negotiations. Previously, on September 22, the UAW extended its strike against General Motors and Stellantis to 38 parts distribution centers across the U.S. but excluded Ford, citing improved offers by the company. However, Ford cautioned that there were still “significant gaps” in its negotiations with the union.
Following the strike, which began on September 15, General Motors shut down its Fairfax, Kansas plant and removed 2,000 workers last month. Similarly, Ford temporarily laid off about 600 workers at a Michigan plant, while Stellantis furloughed about 370 workers across three parts factories in Ohio and Indiana.
On Monday, the UAW said that it proposed a new contract offer to General Motors and held a fresh round of bargaining with Stellantis. GM spokesman David Barnas acknowledged that the company received a counteroffer to its September 21 proposal. “We are assessing, but significant gaps remain,” said Barnas.
Fines Under Stricter Fuel Rules
General Motors, Stellantis, and Ford could face $6.5 billion, $3 billion, and $1 billion in fines, respectively, from 2027 to 2023 under a proposal by the Biden administration that calls for stricter fuel economy rules targeting SUV and truck makers.
The American Automotive Policy Council (AAPC), a Washington-based trade body representing the automakers, said in a letter to the U.S. Department of Energy (DOE) on Friday that the size of the potential penalties for not adhering to the proposed Corporate Average Fuel Economy (CAFE) requirements is “alarming.”
The Biden administration intends to implement stringent rules to reduce emissions and accelerate the shift to electric vehicles (EVs). The AAPC has urged the DOE to reconsider its plan to revise the “Petroleum Equivalency Factor,” as it would result in significantly higher compliance costs for the U.S. automakers.
The letter mentioned that Detroit’s three automakers face $2,151 in compliance costs per vehicle compared to the average of $546 on vehicles sold by other automakers. The AAPC contended that the policy would favor those automakers who are “resisting the transition to a fully electric future the most.”
Using TipRanks’ Stock Comparison Tool, let’s have a look at Wall Street’s ratings for the three Detroit automakers.
Wall Street is highly bullish on Stellantis with a Strong Buy consensus rating and sees an upside potential of 28.5% from current levels. In comparison, analysts are cautiously optimistic on Ford and General Motors.
