Tesla's Biggest Challenge With Giga Berlin: German Auto Union

Tesla Inc’s TSLA Giga Berlin project is well-received in Germany with fast track approvals and promise of job creation, Bloomberg reports. However, it could hit a speed bump with Germany’s IG Metall auto labor union in the way.

What Happened: On Nov. 30, Tesla chief Elon Musk received the Axel Springer Award in Germany for his entrepreneurial achievements. On the other hand, Tesla has entered into a conflict with the powerful 2.3 million-member labor union after ignoring a letter from the IG Metall seeking a dialogue.

At a Berlin protest, many workers denounced Tesla’s poaching of Daimler’s DMLRY Mercedes-Benz head. The deputy leader of a labor-affiliated faction of Chancellor Angela Merkel’s party, Christian Bäumler, said, “It’s not good for an automobile manufacturer to be in permanent conflict with IG Metall. The union has organizational power, it has money, it has experience. It can endure a long fight.”

Bloomberg reports that top officials such as Economy Minister Peter Altmaier are on Tesla’s side, promising to get the Giga plant up and running by mid-2021.

Why It Matters: Elon Musk is not a fan of organized labor. A judge in the U.S. had ruled earlier that Tesla’s labor practices violated the labor law. 

IG Metall’s concern is that Tesla would follow the footsteps of Amazon.com Inc AMZN, which has expanded in Germany without signing wage deals for its warehouse workers despite protests. 

Tesla plans to employ over 10,000 people for the Giga factory. Tesla has long argued that its employees are better off without a union since Tesla sets up its employees for success, and everyone is offered stock options -- Electrek.

Price Action: TSLA shares are trading lower by 2.73% at $568.82 in the pre-market session on the last check Thursday.