The Wednesday Letter 186 - 20 September 2023

THIS WEEK: Detroit vs. Tesla; After the World Order; The India-Middle East-EU Economic Corridor (IMEC); Latest University Rankings; S&P Sectors Update; GeoReads #005; Tweets and Charts.

DETROIT VS. TESLA

The United Auto Workers called for a strike after it was unable to reach a deal on wage increases with US auto companies GM, Ford and Stellantis. The union is seeking a 30% wage increase over four years and other benefits. The legacy producers already pay their workers more than Tesla pays its own. Analysts estimate current average hourly labor costs at GM/Ford at $67 vs. $47 at Tesla (includes pensions and profit sharing but not stock options). This has been a big advantage for Tesla and it has allowed it to cut prices aggressively while remaining profitable. Gene Munster believes that the Big 3 will settle for an increase that will take hourly costs to $105, extending Tesla's cost advantage.

Tesla is not unionized and is able to pay its workers lower wages because it supplements their pay with stock options. The flip side is t…