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Tesla Sweden IF Metall.jpg
Strikers with banner outside Tesla’s Swedish service center: “We demand a collective agreement!”

Labor Strife Shadows Financial Outlook for Embattled Tesla

Tesla’s sales have been dropping across Scandinavia where the strike by the company’s Swedish mechanics has picked up broad support from other elements of organized labor, a critical element of Scandinavian culture.

With Tesla set to release its financial results for the first quarter of 2024 on April 23, all eyes are on the world’s No.1 electric-vehicle builder as a new forecast predicts declines in production and sales is likely to continue through the second quarter and as conflicts with labor unions in Scandinavia and Germany show no signs of easing.

Tesla’s BEVs continue to shake the future of the automotive industry to its foundations, while making CEO Elon Musk into one of the world’s richest men. But the magic is dissipating.

Tesla production and deliveries dropped 9% in the first quarter amid what the company acknowledges were slowing sales in China, disruptions of shipping through the Red Sea and even “terrorism” around Berlin, according to the company’s quarterly sales report. The drop in deliveries is likely to continue through the second quarter, according to the Robert W. Baird financial services firm.

With concern about Tesla's future growing, Musk seems eager to shift the narrative around the company's earnings and says the BEV maker is ready to cut 10% of its workforce – about 14,000 jobs. Musk is offering few specifics about the impact on Tesla's operations. 

Tesla’s troubles are exacerbated by what Musk has dismissed as an “inconsequential” strike by a small group of workers in Sweden, who do not build Teslas but repair and service them.

Musk is critical and dismissive of labor unions, and is refusing to negotiate with IF Metall, the Swedish union behind the strike which began Oct. 27, as he tries to find a way to crush the employee rebellion and keep unions out of Tesla’s plants around the world.

The strike in Sweden continues with support from organized labor throughout Scandinavia, where nine of 10 workers belong to labor unions, and other European countries such as Germany where support for IG Metall (pictured, below), the German metalworkers’ union, grew during a recent vote at Tesla’s vital gigafactory outside Berlin.

Tesla IG Metall.jpg

In Germany, the Works Council is designed to curb old-fashioned industrial strife over work rules, job assignments and working conditions. But after last month’s election in which both sides claimed victory, according to the German press, neither the union nor Tesla’s management appears to have an upper hand.

German unions usually get about 80% of the votes in Works Council elections in Germany, according to Stephen Silvia, a professor at American University in Washington, D.C., who has studied German labor unions and their relations with American companies.

Tesla waged a fierce anti-union campaign that did not stop IG Metall from gaining ground, Silvia says.

With IG Metall only four votes short of control of the Works Council at GigaBerlin, the balance of power could be in the hands of more militant trade unionists less willing to compromise with Tesla’s management, Silvia notes.

Meanwhile, Tesla’s sales have been dropping across Scandinavia where the strike by the company’s Swedish mechanics has picked up broad support from other elements of organized labor.

Tesla’s earlier successes in Scandinavia, particularly Norway where BEVs now dominate, were critical in building Tesla’s image and brand around the world.

But in Denmark, Tesla sales fell by 33% during the first quarter and by 46% in Norway during the same period. Sales in Sweden, the center of the labor strife, dropped by 8% as Tesla also faced rising competition from BEVs made by Volvo and Polestar.

The strike by Swedish mechanics, who are only a fraction of Tesla’s 100,000-plus employees, continues to draw support from trade unionists around the world, according to Industriall, the international confederation of metalworking unions.

Kristyne Peter, international affairs director for the UAW, which is locked in a legal struggle involving the Tesla plant in Fremont, CA, describes Musk as a “budding Bond villain” during a visit to the IF Metall picket line in Stockholm.

“I bring solidarity and support from the 1 million members and retirees of the United Auto Workers,” Peters says. “You inspire all of us with your fight against corporate greed and the billionaire class. The billionaire class that wants to tear down the social democracy that Swedish workers have built.

“You are holding the line against Elon Musk – the billionaire who represents everything that is wrong with the global economy.”

Other Swedish unions have joined IF Metall in the fight over the labor contract Musk refuses to sign. For example, postal workers have refused to deliver license plates, prompting Tesla to sue. That case remains unresolved.

PensionDanmark has sold its $70 million stake in the automaker, saying it is putting Tesla on its blacklist “in the light of the conflict spreading to Denmark and Tesla’s latest and very categorical denial to reach collective agreements in any country.”

Separately Paedagoernes Pension, Denmark’s teachers’ pension fund, sold its 242 million kroner ($35 million) stake in Tesla because it “cannot compromise” on its core values, says the fund’s CEO, Sune Schackenfeldt.

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