By now, the headlines rewarding UAW (United Auto Workers) striking against the major U.S. car manufacturing firms, such as Ford Motor (NYSE: F), General Motors (NYSE: GM), and Stellantis (NYSE: STLA), have made their way to every investor's morning bulletin.

What these headlines won't tell you, as they typically stop at the protein of the drama, is what this means for the stock market. When it comes to automotive stocks, the most significant divide is seen in whether production costs are rising or declining, mainly due to the rate of robotization within factories. 

These strikes, which demand a 30-40% wage increase alongside a 32-hour work week, would inevitably spike production costs for these companies. The result? Risk going out of business due to razor-thin margins, passing costs onto consumers, and losing market share and competitive positioning.

Tesla, an All-round Winner

With oil prices increasing, consumers are becoming more interested in entertaining ownership of electric vehicles, a market vastly dominated by Tesla (NASDAQ: TSLA). UAW strikes are only expanding on the company's strengths, which will become evident in the stock price.

Elon Musk, the company's eccentric founder and CEO, stated that Tesla's production lines are already up to 75% automated through artificial intelligence acting via robotics. 

This makes it very hard for these strike-ridden firms to compete on costs, a theme that shows throughout the gross margins in each. Tesla's gross margins stand at 21.5%, while Ford and General Motors carry 10.3% and 12.7%, respectively, gross margins.

These firms now have two main paths to follow: if they don't want to give up further market share to names like Tesla. First, they can refuse worker demands and expand heavily on their automated factories. However, this would be terrible PR as thousands of layoffs would ensue.

Second, they could give into these demands and likely see their stock prices plummet on lower financial guidance or analyst ratings. After all, decreasing margins further would ultimately take a hit on earnings per share for investors. 

Toyota, the Japanese Economy Replacement

While not as focused on the electric vehicle market, Toyota Motor Co. (NYSE: TM) is still somewhat exposed to the tailwinds of higher oil prices. However, in this situation, what matters to investors is the company's competitive positioning relative to the market.

Considering that Toyota is one of those low beta stocks that provide downside protection, a theme precious in today's market conditions with a rising VIX, it becomes an excellent hedge against the possibility of these strikes escalating further.

Toyota recently released its latest financial results, presenting a 24.2% jump in revenues over the past year. Operating margins also rose from 6.8% to 10.6%, attributed mainly to the company's efforts to streamline and automate production efforts.

To put things into perspective, Tesla's quarter shows an 86% increase in vehicle production over the year and a 47% bump in total revenues. A car manufacturer can achieve these results with the proper grip on costs and labor.

As Toyota's labor force is spread across Asian regions and other emerging markets, the threat of unionizing troops seems to be near the bottom of the list of immediate corporate worries. 

Show your Cards

Say you play out the dominos that are currently beginning to fall. Whichever way you follow the story, it ends up with strike-ridden firms needing to pass on increased costs via more expensive price tags on vehicles.

At the same time, Tesla and Toyota can keep and potentially discount their current inventory due to their stable and controlled production cost structures. What happens then? Brand loyalty can only go as far as a person's wallet takes it.

Markets have digested the potential outcomes from these environments and developments for the set of players on the table. You can get this report card by analyzing analyst EPS expectations and the market-assigned forward P/E ratios, which seek to value such projected EPS.

In the case of Tesla and Toyota, analysts are projecting a 34% and 15.7% EPS jump, respectively, placing these names in the top 10 growth rates of the automotive industry.

Compared to Ford and General Motors, analysts don't seem too excited. These names call for a net EPS contraction of 7.1% and 4.9%, respectively.

On a P/E basis, markets are willing to reward these earnings' underlying quality and growth, where Tesla and Toyota trade for superior 52.7x and 8.8x ratios. Ford and General Motors, by contrast, trade at lower 6.2x and 4.6x balances, respectively.