Tesla’s Anti-Union Model Faces a Massive Challenge In Europe

Key Morningstar Metrics for Tesla

• Fair Value Estimate: $210.00
• Morningstar Rating: 3 stars
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: Very High

When Tesla’s TSLA Swedish mechanics sought union talks, the company stuck to its usual line and turned them down. Instead of coming to nothing like with past attempts to unionize at the electric car maker, a month-long strike has hobbled its distribution in the country, as workers even outside the automotive sector refuse to support its operations. Now the strike has gone international, as Danish transport workers say they will no longer ship Teslas into Sweden. Automotive unions in France, Germany, and the United States are watching closely.

On Tuesday, Danish dock workers represented by 3F, the country’s largest union, refused to help transport American-made Tesla vehicles to Sweden. The same day, Fellesforbundet, Norway’s largest trade union in the private sector, announced a blockade against the delivery of Tesla cars as a sympathy measure. On Friday, AKT, the Finnish transport workers union, announced that dock workers will block the transport of Tesla cars starting Dec. 20.

The strike started in late October, after years of the Swedish union IF Metall trying to get Tesla to accept collective bargaining. The firm’s refusal to negotiate with its Swedish mechanics “represents a substantial threat to the country’s labor model,” IF Metall says. Soon after, several trade unions took industrial action in solidarity with the mechanics, refusing to perform labor that aids the automaker until an agreement is reached. The strike now involves mechanics, electricians, builders, dockworkers, postal workers, and painters.

“We Must Defeat the Tesla Business Model”

Tesla has consistently resisted unionization within its global workforce of 120,000, threatening workers with retaliation if they pursue it. Swedish union leaders have been vocal in condemning this. “Elon Musk’s business model is to avoid respecting human rights. Now he is taken on by one of our strongest unions. We must defeat the Tesla business model, and Sweden is the best place to start,” said IndustriALL general secretary Atle Høie.

Unlike many other European countries, Sweden has no legally enforced minimum wage and little in the way of statutory labor market regulation. Instead, the system is essentially voluntary—a baseline for pay and other conditions, including pensions, is set by collective agreements. More than 90% of Sweden’s workforce is covered by these deals, which has resulted in a remarkably peaceful industrial landscape even by Nordic standards. Sweden lost an average of 8,100 working days a year to industrial action between 2010 and 2021, against more than 120,000 in Norway and Finland.

Despite coordinated action between different unions in Sweden—which is technically illegal in many other European countries and the U.S.—Tesla quickly found ways around the strikes and continued to roll out cars to Swedish buyers. It was not until the Seko trade union announced its solidarity measures that things got intense.

Seko’s strike involves a blockade against the delivery and collection of shipments, letters, packages, and pallets made by PostNord and CityMail to all of Tesla’s facilities in Sweden. This means new Teslas can’t even get Swedish license plates. Tesla’s CEO and largest individual shareholder Elon Musk took to the social media platform X (formerly Twitter), which he owns, to denounce the blockade as “insane.” In response, Tesla filed lawsuits against the Swedish Transport Agency and PostNord AB (Sweden’s postal service). While one court favored Tesla, another rejected it over so-called interim security measures. No final verdict has been presented as of yet, and Teslas are still missing their license plates.

The battle has sparked debate in Sweden. Economist Claes Hemberg argues that IF Metall has lost the plot. “I don’t think it is the union’s role to chase companies out of Sweden. I think they have misunderstood their role and have identity problems,” he told financial daily Dagens Industri.

Günther Mårder, former CEO of business lobbying group Företagarna, agrees: “The mafia-like measures that we now see both IF Metall and the sympathizing unions carry out against Tesla make me worried. All other agreements signed under duress and threats are rightfully declared void. Why is it both valid and accepted when unions are involved?”

The unions don’t look like they’re about to back down, and they’re ramping up coordinated industrial actions. If they succeed, this could be a tremendous symbolic victory, which would strengthen union movements regarding Tesla on both sides of the Atlantic.

AMF, one of Sweden’s biggest occupational pensions companies, has sent a letter to Tesla’s American board demanding that they improve and “adopt the customs of the country.” AMF is one of the largest Swedish institutional owners of Tesla, with shares worth around $337 million at the start of December, according to Morningstar Direct.

Despite the Battle, Tesla Sales Hold Strong

Tesla managed to sell the second-most amount of cars in Sweden in November, with 1,236 new Model Y registrations, showcasing the automaker’s resilience despite this conflict. The Model Y dominated Sweden’s new car market in 2023, scoring 3,675 more registrations than the country’s second-most popular model, the Volvo XC40.

Swedes love Teslas, but the company’s annual sales there—dwarfed by those in the U.S., China, and Germany—aren’t a make-or-break issue for it. Rather, this standoff could prove a bellwether for its broader labor relations.

Global Interest

Germany is Tesla’s largest European market and home of its Grünheide factory, where roughly 10,000 employees make EVs and batteries. Workers in the country are closely watching the Swedish union battle.

IG Metall, Germany’s largest and most powerful union, says members employed at Grünheide have complained about poor working conditions, extreme workloads, and excessive production targets. The union estimates that wages there are about a fifth lower than they would be under a collective agreement.

“Just a couple of weeks ago, over 1,000 workers at Grünheide declared their dissatisfaction with the existing working conditions by wearing IG Metall buttons during their shifts. By doing so, they broke Tesla’s climate of fear once and for all. This action was taken in the same spirit as our Swedish colleagues,” said IG Metall’s Dirk Schulze at the end of October. But German law prohibits solidarity strikes, despite requests from their Swedish counterparts.

Employees in the U.S. have also frequently complained about their working conditions. Tesla is the only major U.S. auto manufacturer not represented by a union, and the United Auto Workers have tried to organize there for years.

Branislav Rugani, international confederal secretary at the French union Force Ouviere, has also said that what is happening in Sweden will influence what happens around the world. “I completely agree with the union strike in Sweden,” he said. “Eighty percent of workers are covered by union agreements. We can’t let a foreign company come to European soil and disobey the rules we’ve put in place. If we let them come in and they refuse to negotiate, it’s the beginning of the end. Workers’ rights would be lost.”

How Might This Impact Tesla Shares?

In facing off with its Swedish mechanics, Tesla may have placed itself at a pivotal juncture for its business model. Investors must keep a close eye over the next weeks and months. If the unions succeed, it will heap pressure on Tesla in all other markets, where they have been fighting the same battle for years. But if Tesla remains steadfast, the Swedish unions will likely intensify efforts to drive the company out of the country.

Morningstar analyst Seth Goldstein is optimistic. “I’d imagine Tesla is negotiating with its union in Sweden to come to a resolution, and I would expect the two sides will eventually reach an agreement,” he says. “As a result, I don’t see a huge impact on Tesla.”