Tesla Faces Escalating Union Dispute, Investors Expressed Concern

Dec 18, 2023 09:35 PM EST

SPORTS CAR PARKED BESIDE THE ROAD — (Photo : PEXELS/Makara Heng)

Tesla is presently embroiled in an escalating union dispute that is getting worse, garnering the attention of big investors. Recently, a group of pension funds and asset managers called Tesla CEO Elon Musk and asked him to change his mind. Together, they are in charge of assets worth a huge trillion dollars.

Escalating Argument

These Nordic institutional investors, including prominent names like Denmark's Velliv Pension & Livsforsikring A/S and AkademikerPension, expressed profound concerns about Tesla's approach to worker rights, particularly in Sweden. Their main demand is that Tesla allow its workers to join collective bargaining deals, something they think is necessary to protect worker rights.

According to Autoblog, one of the key issues highlighted by this group of at least 15 investors is Tesla's challenge to the "Nordic Model." The automaker has been unwilling to allow mechanics at seven of its Swedish repair shops to enter into agreements that safeguard fundamental rights such as equitable pay and gender equality.

Paradoxically, the same "Nordic Model" that Tesla challenges has played a pivotal role in the company's success in the region, enabling it to amass a significant market share, surpassing even Germany in terms of car deliveries.

Since it started in October, this conflict has already made it hard for Tesla to do business in the Nordic area. Other trade groups have taken action to show support, and the news has even reached dockworkers in Denmark, Finland, and Norway, which are all close by.

Because of this, Tesla will soon have to use trucks from mainland Europe to bring its cars to Sweden, which will make things even more difficult. The intensification of this union dispute is a matter of growing concern for both Tesla and its investors alike.

Meanwhile, Barron's report described this problem as something not to end soon. The ongoing union dispute involving Tesla in Europe shows no signs of resolution; in fact, it is steadily escalating and expanding.

Tesla is actively seeking a public policy specialist to operate within the Nordics region, encompassing Norway, Sweden, Denmark, Finland, and Iceland. This move suggests that the company anticipates a protracted struggle with labor unions in the area.

"The position aims to contribute to the alignment of the 'Nordics' political, regulatory, and fiscal landscape with Tesla's mission," states the job listing featured on Tesla's website. The company is seeking an individual with a demonstrated history of successfully effecting regulatory modifications within the Nordics.

Additionally, it appears that this individual will need to possess adept negotiation skills in dealing with unions to mitigate the risk of the dispute further intensifying.

Investors' Letter

While these investors haven't explicitly threatened to divest their Tesla holdings, there are indications of cracks forming. Notably, PensionDanmark A/S, a Danish fund, became the first major asset manager in the region to publicly divest its $69 million stake in Tesla as a direct consequence of this dispute.

Furthermore, these investors acknowledged the long-standing tradition of collective bargaining and expressed their desire for a meeting in early 2024 to address the issue. They articulated in their letter, "As Nordic investors, we acknowledge the long-standing tradition of collective bargaining and, as a result, implore Tesla to reconsider its current stance on labor unions."

The Business Insider reported that, investors in Tesla are paying close attention to how the company handles a labor disagreement in another country.