Possible autoworkers strike to have limited impact on battery metals demand

Electric vehicle deliveries could be delayed by an autoworkers strike, but the impact on global markets for commodities such as lithium and cobalt will be limited as the largest US producer of EVs is not unionized, experts told S&P Global Commodity Insights.

Labor negotiations between automakers Ford Motor Co., Stellantis NV and General Motors Co., collectively called the Big Three, and the United Automobile Workers union (UAW) have thus far failed to produce a deal that would avoid a strike. Talks are ongoing, with the UAW contract ending Sept. 14 at 11:59 p.m. ET. The union is demanding a greater share of the automakers' profits in the form of increased wages and benefits, and the carmakers' counterproposals have not been accepted by the UAW.

A strike could sharply curtail the three companies' vehicle outputs as workers walk out. This includes EVs, which contain mineral-rich batteries and are a leading source of demand for certain critical minerals including lithium and cobalt. Environmental campaign organization Transport & Environment estimates an average EV lithium-ion battery in 2020 contained 6 kilograms of lithium, 8 kilograms of cobalt and 29 kilograms of nickel, for example, and Commodity Insights analysts expect EV-driven mineral demand growth to expand in coming years.

However, most US battery production facilities are not unionized. Tesla Inc., which held 62% of US EV market share in 2022 according to Bank of America, is not unionized and does not face any repercussions from a possible strike.

Ford, GM and Stellantis declined to comment or did not respond to requests for comment about a strike's impact on their supply chains.

However, the Big Three are not yet major EV producers on the global scale. Ford held 8% of the US EV market in 2022, and GM just 5%, according to analysts from Bank of America and reported by CNBC. And few US battery-production sites — save for one battery-manufacturing joint venture between GM and LG Energy Solution Ltd. in Ohio — are unionized and therefore would not participate in a strike.

"EV batteries are not made, as far as I know, at least, in the big assembly plants and by auto companies directly," said Thomas Kochan, a professor focusing on work and employment at the Massachusetts Institute of Technology. "Those are outside of the scope of the strikes, so I don't see why they should be affected by that."

Reducing the impact further, the US is only the third-largest market for EV sales in 2023 through 2027, according to Commodity Insights estimates. Sales in China are estimated to reach 8.2 million units this year while reaching an estimated 3.12 million in the EU and 1.45 million in the US.

To be sure, a strike would have at least a small impact on global battery metals demand.

"In the first half of 2023, the Big Three deployed nearly 15,000 [metric tons] of battery metals and materials onto roads in US-made EVs. ... It stands to reason that at least the same amount of materials are at risk should the strike proceed and persist," said Alla Kolesnikova, head of data and analytics at critical minerals research group Adamas Intelligence. "Should the strike be resolved in the weeks or months to follow, we would expect much of the delayed demand to materialize in early 2024."

If a strike does persist, Tesla and others are poised to further increase their market share.

"Should the strike proceed for an extended period, potential buyers may turn to the incumbents like Tesla or foreign original equipment manufacturers," Kolesnikova said.

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