Tesla's Nordic Nightmare: A Swedish Union Showdown Threatens Musk's Anti-Union Fortress In America

The ongoing conflict between Tesla Inc TSLA and car mechanics in Sweden has escalated even further this week with the introduction of a lawsuit against the Swedish state by Tesla.

The strife broke out last month, when IF Metall, a workers union which represents Tesla mechanics in the Scandinavian country, announced a strike after the carmaker failed to sign a collective agreement, a common practice between Swedish workers and employers.

Problems for the Austin-based EV maker grew larger as a significant number of workers in other areas of the country decided to stand in solidarity with the mechanics, causing trouble for Tesla all along its Swedish supply chain.

Just days ahead of the official launch of Tesla’s long-awaited Cybertruck, the conflict is becoming a new stick-in-the-wheel for the Elon Musk-led company. Musk announced that the first units of Tesla’s first pickup truck will be delivered on Thursday of this week as part of a special company event.

Tesla stock is up 0.9% on Monday following a month-long climb of over 14%.

What's Going On With Tesla In Sweden?

With a population of 10.4 million and a median household income of about $74,000 (in 2021 numbers), Sweden represents a minor but still significant market for the automaker. The country's long history of early adoption in sustainability practices also places it as a good opportunity for the EV maker to realize sales in the short to medium term. 

Tesla does not produce any cars in Sweden but offers customer support and repairs. The company sold more units of its Model Y per capita in Sweden than in the U.S., as per data from Mobility Sweden and Car Figures, with 14,000 units sold in Sweden versus 292,000 sold in the U.S.

In the Swedish labor system, as per IF Metall, the government minimally intervenes in wage discussions. These negotiations are independently conducted between employers’ associations and labor unions, focusing on matters such as wages, benefits, insurance, and other employment conditions.

It is not illegal to go without collective agreements, but according to the trade union, employees of companies lacking those "have worse conditions than colleagues at workplaces with collective agreements."

Sweden’s labor model is fundamentally built on collective agreements, with 90% of its workforce being covered by such agreements.

The conflict with Tesla escalated when several other trade unions in the country began setting up roadblocks for Tesla as a way to pressure the company into signing a collective agreement with the mechanics.

Earlier this month, dockworkers in Sweden's four major ports began blocking the entry of Tesla vehicles to the country, effectively limiting the stock of new Tesla units in Sweden.

Musk wrote on Twitter that "this is insane," as more groups of workers joined the cause.

IF Metall chair Marie Nilsson told The Guardian that the strike involving Tesla represents more than just a single company’s issue. It is part of a broader effort to safeguard Sweden’s labor model from external influences.

"If we allow companies like Tesla to operate without collective agreement, it will open it up for other international companies and other types of industries," she said. 

Other unions join the protests, with electricians denying service to Tesla workshops and painters staying away from Tesla cars. Members of PostNord, a state-owned postal service shared between Sweden and Denmark, joined the strike last week unionized under the Swedish Union for Service and Communications Employees, denying delivery of license plates to Tesla dealers, effectively barring the company from selling new cars.

Also Read: Tesla Vs. Rivian: Which EV Stock Offers More Upside?

Tesla Strikes Back In Court

According to court documents reviewed by Reuters, Sweden's Transport Agency, in charge of issuing license plates, initially denied Tesla a request to pick up the license plates themselves or use a separate delivery service.

Tesla introduced a lawsuit against PostNord and the Swedish Transport Agency on Monday morning, as reported by Swedish outlet Dagens Industri. The action was quickly answered by a district court, which gave the company permission to pick up its license places, against the opinion of the Transport Agency, as reported on Monday afternoon by the same outlet.

Yet Tesla's troubles in the Nordic country are far from over. IF Metall's Nilsson said that the strike "can take a long time," and it "will keep going for as long as is needed."

Jørn Eggum, who leads a union of about 500 Tesla employees in neighboring country of Norway, said his organization would also join the strike in solidarity. This decision is influenced by concerns that Tesla might attempt to circumvent the ongoing blockade at Swedish docks by importing cars through Norway and then transporting them overland into Sweden.

Benzinga's Take: The recent conflicts between car manufacturers and employees, particularly those involving the big three Detroit automakers, highlight the growing tensions in the auto industry. In this context, the move towards unionization by Tesla employees poses a major challenge for Tesla, indicating a potentially escalating situation in the industry.

Ford Motor Co F, General Motors Co GM and Stellantis NV STLA were affected in recent months after the United Auto Workers pushed to re-negotiate contracts, successfully reaching new tentative agreements with all three companies late last month. The agreements will invariably mean a rise in operating costs for the carmakers.

Musk and Tesla have been openly against unionizing, banning union t-shirts as well as reportedly firing employees who manifested plans to unionize.

After the UAW victory in Detroit, several non-unionized automakers including Hyundai Motor Company GDR HYMTF, Honda Motor Co Ltd HMC, Toyota Motor Corp TM, Nissan Motor Co Ltd NSANY and others announced they would also raise their wages inline with the Detroit deals. 

This is putting pressure on Tesla to also follow suit. The UAW’s deals present an additional challenge to Tesla. UAW President Shawn Fain, in a recent MSNBC interview, pointedly criticized Elon Musk and similar business figures, stating, "the Elon Musks of the world" make their fortunes "on the backs of the working class people."

The labor conflict in Sweden is more than a local issue for Tesla. If the EV maker yields to union demands there, it could undermine its anti-union stance globally, potentially inspiring more unionization efforts in the U.S. and at its plants worldwide.

Now Read: UAW Strike Impact? General Motors Not Spending On Super Bowl Commercials

Photo by Ivan Kazlouskij on Unsplash.