Get the latest market trends in your inbox

Stay on top of the latest market trends and economic insights with the Axios Markets newsletter. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Denver news in your inbox

Catch up on the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Des Moines news in your inbox

Catch up on the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Minneapolis-St. Paul news in your inbox

Catch up on the most important stories affecting your hometown with Axios Minneapolis-St. Paul

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tampa-St. Petersburg news in your inbox

Catch up on the most important stories affecting your hometown with Axios Tampa-St. Petersburg

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Illustration: Eniola Odetunde/Axios

The deal between one of Detroit's biggest automakers and striking workers is a calculated bet on a vision for the auto industry that's far from certain.

The big picture: GM can afford the rich contract terms negotiated with the United Auto Workers — as long as nothing goes wrong. Higher gas prices, an economic downturn or a new president with different priorities could throw off the entire equation and put GM and other domestic automakers in a financial bind.

  • On top of those worries, the industry is facing the most disruptive technology shift in 100 years, leaving companies like GM awkwardly straddling the past and future.
  • Jonathan Smoke, chief economist at Cox Automotive, says it's not clear when the inflection point for giving up the steering wheel will be, if ever.

Driving the news: UAW members and General Motors approved a four-year labor contract on Friday, which secured better pay and benefits for workers. The union will now turn its attention to Ford, with the GM contract as a template.

  • The end of the nearly 6-week-old strike comes with a promise from UAW to not oppose GMs' plans to close four facilities across the U.S. The strike has cost GM $1.75 billion in lost profits, according to Anderson Economic Group.
  • GM committed to adding thousands of new jobs and said it would decrease the number of years required for workers to earn the top wage of more than $32 an hour. Union members were divided prior to the deal on whether it provided enough long-term job security.

GM is more aggressive than most in the push toward the future with its majority stake in self-driving startup Cruise Automation and a plan to introduce 20 EVs by 2023.

  • The automaker is sustained, however, by the fat profits from traditional pickup trucks and SUVs.
  • To pay for the R&D on future technologies, GM needs to keep pushing those gas guzzlers for the foreseeable future.
  • "They're really trying to run 2 auto companies," says Barclays automotive analyst Brian Johnson.

GM tried to protect its flexibility in the labor agreement by trading higher wages and benefits for the ability to close a massive car factory in Ohio and two transmission plants.

  • Yes, but: Detroit's total labor costs remain significantly higher than foreign-based rivals with factories here: $63 per hour at GM vs. $61 for Ford, $55 for Fiat Chrysler and $50 for the so-called transplants.

But all 3 Detroit carmakers left their flank open by getting out of the traditional sedan business — effectively ceding that market to Asian competitors.

A new president could alter the landscape, too. Sen. Elizabeth Warren, for example, has pledged to halt fracking, which would likely drive up oil prices.

  • That would make those thirsty trucks and SUVs less appealing to consumers, squeezing Detroit's primary profit source.
  • Trade policy and emissions standards are also wild cards, depending on who is in the White House.

What to watch: Auto sales are already trending downward. A recession would cause them to drop 20%, Smoke tells Axios.

Go deeper: 40-day GM strike ends with new labor contract

Go deeper

Democrat Mark Kelly sworn in to U.S. Senate

Photo: Courtney Pedroza/Getty Images

Astronaut Mark Kelly (D) was sworn in to the U.S. Senate on Wednesday after defeating incumbent Sen. Martha McSally (R-Ariz.) last month for the seat once held by the late Sen. John McCain.

Why it matters: Kelly's swearing-in by Vice President Mike Pence narrows the Republican majority and moves the Senate balance to 52-48.

Senate Armed Services chair dismisses Trump threat to veto defense bill

Sen. Jim Inhofe. Photo: Anna Moneymaker/Pool/AFP via Getty Images

Sen. Jim Inhofe (R-Okla.), chair of the Senate Armed Services Committee, told reporters Wednesday that he plans to move ahead with a crucial defense-spending bill without provisions that would eliminate tech industry protections, defying a veto threat from President Trump.

Why it matters: Inhofe's public rebuke signals that the Senate could have enough Republican backing to override a potential veto from Trump, who has demanded that the $740 billion National Defense Authorization Act repeal Section 230 of the Communications Decency Act.

Scoop: Uber in talks to sell air taxi business to Joby

Illustration: Sarah Grillo/Axios

Uber is in advanced talks to sell its Uber Elevate unit to Joby Aviation, Axios has learned from multiple sources. A deal could be announced later this month.

Between the lines: Uber Elevate was formed to develop a network of self-driving air taxis, but to date has been most notable for its annual conference devoted to the nascent industry.