Tesla Inc (NASDAQ:TSLA) stock is pulling back after nearing all-time highs, and it’s possible that concerns about Tesla’s labor force are part of the reason for the modest decline in TSLA stock. Last week, it was reported that TSLA factory workers had contacted the United Auto Workers about creating a union.

One Tesla worker posted an essay online, criticizing working conditions at the company’s facility in Fremont, California. Tesla CEO Elon Musk replied angrily, stating that, “I find this attack to be morally outrageous.” For its part, the UAW has said that the decision to create a union is up to Tesla workers.

Fundamentally, the impact of a potential Tesla union on TSLA stock likely won’t be very significant — at least not directly. But, the kerfuffle over unionization highlights the potential political pitfalls that Musk and Tesla must navigate. In an increasingly polarized country, consumers are starting to act like voters — every day, and that implies some potential risks for Tesla stock.

The Fundamental Impact of a Tesla Union on Tesla Stock

It’s tough to parse out what a Tesla union would do to TSLA earnings. Management doesn’t break out precise wages, for instance. But, we can get close to a reasonable estimate. In 2014, Tesla told the state of Nevada that its Gigafactory would employ 6,500 employees, with annual total wages of $353 million.

The company has almost the same number of workers (6,200) at its Fremont plant, according to a December report, with plans to expand that plant and add another 3,100 jobs. A rough assumption that wages are relatively similar would imply that (post-expansion) potential Tesla union workers would earn at least $500 million per year in wages.

Considering Tesla’s current shipment status, that’s a large sum. Trailing 12-month sales are less than $6 billion. But, even with TSLA stock based on where Tesla is going, a wage hike could justify a material change to TSLA’s valuation. Even a 20% hike would add $100 million-plus in costs, or approximately $65 million per year after tax. That’s roughly 40 cents per TSLA share per year; at a 30x multiple, higher wages could take as much as $12 off the fair value of Tesla stock.

However, that’s an imperfect estimate for a number of reasons. Tesla’s focus on technology likely means the company will require fewer workers over time. Plus, TSLA can find other costs to cut to offset wage pressure, as many companies do.

Still, fundamentally, there is reason to believe that a Tesla union could have a modest impact on Tesla stock. It doesn’t look like unionization would ruin the company, as some commentators believe happened to Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM) before the financial crisis. But, there is the possibility of a Tesla union having an impact on long-term earnings, and, as such, the long-term price of TSLA stock.

The Perception of Tesla and Tesla Stock

Where the issue gets dicier for Tesla, in my opinion, is relative to the company’s perception. Since last year’s presidential election, consumers increasingly vote their politics with their pocketbooks. Liberals against President Donald Trump have boycotted Amazon.com, Inc. (NASDAQ:AMZN), Macy’s Inc (NYSE:M) (including subsidiary Bloomingdale’s, Inc.) and many others.

Conservatives have shunned PepsiCo, Inc. (NYSE:PEP), Kellogg Company (NYSE:K) and a myriad of other companies, including Amazon. (Evidently, though, the AMZN boycotts aren’t holding very strongly.)

That leaves Musk, and Tesla, in a tough spot. This isn’t the first time TSLA has faced reports of underpaying its labor. Last May, The Mercury News reported that the company paid workers a mere $5 per hour during a construction project. Management responded by pointing out that it had paid its subcontractor $55 per hour for the labor. And, of course, there was yet another political storm when Musk met with President Trump soon after the inauguration, despite howls of protest from some supporters.

The catch for both Tesla and TSLA stock is that the company can’t divorce itself from politics. It’s a “green” company, which draws admiration from the left. It is emphatic in its intent to be “Made in America,” which likely endears the company to Trump. But, Tesla and Musk need to walk the line very carefully to appeal to both groups.

Bottom Line on TSLA Stock

A Tesla union could put Musk in a bit of a jam. He needs to keep the pro-labor left happy, while also protecting TSLA stock shareholders, and his company’s cash as it builds out his infrastructure. Push too hard against the workforce, and liberals will see Musk as another heartless capitalist. Give too much, and investors will see Tesla as a company run for its employees, not its shareholders — and potentially the next 2008-era GM.

It’s a difficult dance, and if anyone can do it, it’s likely Elon Musk. But, he will have to dance very carefully.

As of this writing, Vince Martin did not hold a position in any of the aforementioned securities.