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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

Erica Pandey, author of @Work
1 hour ago - Economy & Business

What's really going on with the labor market

Source: YCharts

The labor market is showing some signs of improvement: Jobless claims fell to 730,000 — a dramatic drop from 841,000 the previous week. And the latest jobs report showed a pandemic-era low unemployment rate of 6.3%

But, but, but: That's not the full story, experts say.

Felix Salmon, author of Capital
2 hours ago - Economy & Business

Markets see rare convergence milestone

Expand chart
Data: YCharts; Chart: Axios Visuals

A milestone was reached in the markets Thursday: The yield on the 10-year Treasury note rose to match the dividend yield on the S&P 500

Why it matters: The two yields have been inverted since the beginning of last year, which is historically unusual.

Mike Allen, author of AM
2 hours ago - Economy & Business

First look: Business puts muscle behind Biden

Business Roundtable, the voice of America's top CEOs, today launched "Move the Needle," a campaign to support President Biden in rolling out COVID vaccines, increasing vaccine uptake and encouraging masks.

What they're saying: "Masks and vaccines are working. Now is the time to keep at it, overcome pandemic fatigue, and double down on the measures that will end this public health and economic crisis, said Business Roundtable president and CEO Josh Bolten.