New trouble for traditional American car factories! Unions or "lion's mouth", GM, Ford tumbled.

On Thursday, August 10th, due to the possibility of unions demanding additional expenditures of up to $80 billion from the two major American automakers, General Motors plummeted by 5.8%, with an intraday drop of over 6%; Ford Motor also experienced a significant decline of 4.5%, with an intraday drop of over 5%. These two stocks ranked among the top three in terms of decline in the S&P 500 index.

The unions are calling for wage increases and other reforms from these two companies, which is expected to result in additional expenditures of over $80 billion for each of them. Market concerns arise from the potential negative impact on company operations and profit prospects if an agreement cannot be reached and a strike is initiated.

Some analysts believe:

Both General Motors and Ford Motor may face punishment in the stock market for a period of time. Wall Street dislikes uncertainty. From both the style and the demands made by the unions, this is not a normal negotiation.

Currently, the three major American automakers, including General Motors, Ford Motor, and Stellantis, are engaged in intense negotiations with the United Auto Workers (UAW) union for a new four-year contract. The union hopes for a 46% wage increase, the restoration of traditional pension benefits, attention to the increased cost of living for workers, a reduction in working hours, and improvements in retirement benefits.

The power of unions in the American automotive and transportation industries should not be underestimated. Just a few weeks ago, the truck drivers' union reached a temporary agreement with UPS, resulting in billions of dollars in new costs for UPS and a downward revision of its financial outlook.

Shawn Fain, President of the UAW, believes that the approximately 150,000 union members of the three major American automakers deserve better compensation because these workers helped these companies recover from the recession in 2008 and contributed to their record-breaking profits.

However, the automakers argue that they have already provided generous compensation and benefits to their workers and, in the process of investing billions of dollars in transitioning to electric vehicles, need to maintain competitiveness in terms of wages and other aspects compared to low-wage and non-union competitors like Tesla.

Today, traditional American automakers such as Ford Motor and General Motors are facing the challenging process of transitioning to electric vehicles. Their electric vehicle businesses are still experiencing substantial losses, and the companies are employing various means to generate more profits from their traditional fuel vehicle operations to subsidize their electric vehicles.

Taking Ford Motor as an example, although its Ford Model e business unit, which focuses on electric vehicles and innovative technologies, achieved a 39% increase in revenue in the second quarter, the revenue was only $1.8 billion, while the operating loss amounted to a staggering $1.08 billion. During the first half of the year, Ford Motor's electric vehicle business suffered a loss of as much as $1.8 billion.

Due to the impact of the electric vehicle pricing environment, investments in next-generation products and capacity, and other cost expenditures, Ford Motor expects the loss in its electric vehicle business to expand to $4.5 billion this year, which is 50% higher than previous forecasts.

While traditional automakers are still struggling in the development and promotion of electric vehicles, Tesla is already prepared to launch a new affordable electric vehicle.

The governor of Nuevo León, Mexico, where Tesla's fifth Gigafactory is located, announced last month that Tesla has entered the final stage of designing the new Model 2, which will be the "best" and most affordable electric vehicle in the world.

As early as Tesla Battery Day in 2020, Musk announced that Tesla would produce an electric vehicle priced at $25,000, reducing the cost of electric vehicles by 50% through vertical integration and more powerful battery production technology.

Tesla has also revealed the compact battery size that may be used in the Model 2. The model will use an LFP battery pack with an average capacity of 53 kWh, which is 25% smaller than the battery capacity used in the current Model 3. However, due to the shorter wheelbase of the Model 2, the vehicle weight may also be reduced by 30%. Therefore, despite the smaller battery capacity, the range may be consistent with the entry-level Model 3 currently on sale.