Elon Musk’s Tesla union troubles escalate rapidly in Scandinavia

While Musk has called the dispute “insane,” his refusal to negotiate runs the risk of denting sales in the Nordic countries, where eco-conscious and well-to-do buyers have helped facilitate the consumer shift to cleaner cars. Battery-powered vehicles make up over half of new auto sales in Sweden and 90% in Norway, which was among the first backers of the technology.

The problem is that, while many Scandinavians take pride in their eco-credentials, Musk’s anti-union attitude stands in sharp contrast to the egalitarian beliefs that some hold even dearer. In Sweden, two-thirds of working adults belong to a union, and around 90% work in places with collective bargaining agreements.

Collective bargaining is at the heart of the current controversy, as minimum wage, overtime compensation and employer pension contributions are not enshrined in Swedish law but instead determined through workplace agreements. While employees at Tesla’s Swedish repair shops already have these provisions written into their contracts, the union argues that an official agreement would be a better way to ensure “decent and safe working conditions.”

There are already signs that some Scandinavian firms may be distancing themselves from Tesla in response to the labor battle.

On Thursday, a Danish pension fund said it will ditch Tesla’s stock, becoming the first major institutional investor to do so publicly. Last month, one of Sweden’s biggest taxi companies, Taxi Stockholm, said it would pause all Tesla purchases to pressure its leaders to sign a collective bargaining agreement, and a recent poll of 120 Swedish businesses with a minimum of 100 company cars found that over half would at least temporarily stop buying Teslas because of the situation.

Musk has said little about the conflict explicitly, but he did address the topic of unions at the New York Times’s Dealbook Summit last week, saying that they create “adversarial” relationships within businesses. “I disagree with the idea of unions,” he said. “I just don’t like anything which creates a lords and peasants sort of thing. I think the unions naturally try to create negativity in a company.”

Comments such as these are a slap in the face to Scandinavian labor union leaders, including Susanna Gideonsson, president of the Swedish Trade Union Confederation, which counts the striking Industrial Workers’ Union as one of its 14 constituent members.

“What grinds our gears is that a large corporation thinks it can come here and set the rules on the Swedish labor market,” Gideonsson said in an interview. “To think you can waltz in here as a feudal lord and think a whole country should adapt to one’s whims is just wrong.”

Gideonsson noted that there are several recent examples of foreign firms entering the Swedish market and successfully reaching collective bargaining agreements, including Japanese fashion giant Uniqlo, which signed an agreement in 2018 ahead of opening its first Swedish store.

While Musk enjoys the support of more conservative and free-market-supporting Swedes, if he were to dig in, it could alienate the broader Nordic public, as labor unions enjoy wide support that draws on a strong history of cross-border organizing.

“While it’s not common, the tradition of collaborating across Scandinavia goes back very far,” said Jesper Hamark, visiting research fellow at the University of Gothenburg and a labor union historian. He added that unions in all these countries have wide-ranging rights that allow them to engage in sympathy actions, and that it was unlikely Swedish unions would back down any time soon. And as Sweden goes, he said, so too does the rest of the region.

Scandinavia isn’t the only place where labor storms seem to be gathering around Tesla. The company is facing mounting pressure in Germany, where accusations of poor working conditions at its factory near Berlin have led to a surge in union activity. In October, the leader of Germany’s powerful IG Metall union, which has the abillity to initiate walkouts at firms such as Airbus, Siemens, and Volkswagen, warned Musk he needs “to be careful.”

In its home market, Tesla is also being pressured by the United Auto Workers union, which is newly emboldened after winning a series of record-breaking wage increases through strikes across Detroit’s Big Three automakers. While Tesla has so far resisted unionization efforts in the US, it is now very much in the UAW crosshairs.

“One of our biggest goals coming out of this historic contract victory is to organize like we’ve never organized before,” UAW President Shawn Fain said in October. “When we return to the bargaining table in 2028, it won’t just be with a Big Three, but with a Big Five or Big Six.” 

If Tesla’s Nordic conflict were to escalate to the point that it alienates more businesses, it could put the company’s CEO back in a now-familiar position. In November, after Musk seemingly agreed with an antisemitic post on X, the platform formerly known as Twitter, major companies stopped advertising on the service as a result.

While apologizing for the post, he announced last week in front of an audience at the New York Times event that advertisers who would shun X because of his comments and the platform’s widely-reported struggles to remove hate speech should go “f—” themselves.

None of this is happening at a good time for Musk, who is facing increased pressure to shore up profitability in the companies he helms, including Tesla. During its third-quarter earnings call Musk said Tesla is “ruthlessly” cutting costs, saying the firm would skip putting stickers and QR codes on its car parts if it means saving a few pennies.

Aside from the labor tussle, Musk is navigating growing concerns that EV demand is starting to weaken as high interest rates and a cost-of-living crisis push up the cost of owning a car. Warning signs appeared early this year when Tesla started aggressively cutting prices in an effort to prop up sales. That sparked a price war as other EV makers followed, eating into profitability for some and pushing up already steep losses for others.

Meanwhile, in the Nordics, labor unions are doing their best to make it as expensive as possible for Tesla to stand outside the unionized norm. As of Dec. 20, Tesla shipments headed to Sweden by sea will be blocked across all of Scandinavia, leaving the company little choice but to offload shiploads in continental Europe and transport the EVs to Sweden in small batches via trucks.  

Susanna Gideonsson, the labor president, said she believes Tesla “has done a tremendous amount of good” for the green transition. However, she added that the company has needlessly turned the standoff into a matter of pride and is ignoring the benefits a collective bargaining agreement could bring. “We don’t like to strike,” she said. “We are used to talking, discussing and reaching compromises.”