Just days after enduring yet another $2 billion equity offering, Tesla Motors Inc TSLA 2.52% may have a brand new headache to worry about: the United Auto Workers (UAW) union. UAW President Dennis Williams told reporters in Detroit last week that they are familiar with Tesla’s Fremont, California plant.
“We’re very interested in Tesla,” Williams said.
Why Should Shareholders Care?
UAW representation could potentially mean higher wages, stricter workplace rules, labor stoppages and, ultimately, higher costs for Tesla. For a company that has repeatedly drawn criticism for its aggressive cash burn and consistent equity offerings, the last thing Tesla needs is higher costs.
At the very least, the potential for Tesla workers to join the UAW is enough uncertainty to make shareholders uncomfortable. The stock’s current share price along with the company’s extremely ambitious goal of producing 500,000 vehicles by 2018 leaves very little margin of error.
On Monday, Bank of America analyst John Murphy resumed coverage on Tesla with an Underperform rating and reiterated the firm’s $155 price objective for the stock. Murphy called the goal of 500,000 units per year by 2018 “optimistic at best.”
Williams clarified…
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