Image: Striking Tesla workers in Sweden

October 27 marked the one-year anniversary of the Swedish strike against Tesla, the notoriously anti-union car manufacturer. It’s the first and only strike against the world’s most valuable carmaker, and it has now become the longest-running strike in Sweden in the past 100 years. As it stands, 14 Swedish and Nordic labour unions are formally involved in the dispute. Outside the Nordic countries, the dispute has been widely covered in international media and boosted the morale of unions in some of Tesla’s key markets in Europe and the United States.

The industrial union IF Metall is demanding a collective bargaining agreement for mechanics in Tesla repair shops across the country. But after a year’s strike, the outcome is highly uncertain. What is clear is that the union-busting methods Tesla has employed in the United States will not be tolerated in Sweden. As noted by Atle Høie, general secretary of IndustriALL, an industrial union confederation representing 50 million workers in 140 countries, “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.”

A union stronghold

It’s not surprising that the Swedish union movement is the first to take on the staunchly anti-union carmaker. Sweden is one of the most unionized countries in the world, with around 70 per cent of the labour force consisting of union members. Swedish labour unions very rarely go on strike, and only after carefully considering other options. But when they do, they have a broad legal mandate to pressure employers into negotiating collective agreements.

They have power resources that are not available to organized labour in many other countries. For example, they can strike against companies that do not have collective agreements, pressuring them into signing one. The Tesla dispute is a case in point. Swedish unions can also call solidarity strikes (sometimes called sympathy strikes or secondary strikes) –collective action measures that can be used to support a primary dispute.

IF Metall called the strike following five years of refusal by Tesla’s Swedish subsidiary, TM Sweden, to negotiate a collective bargaining agreement. The first strike notice was limited to union members among Tesla’s own employees, about 120 mechanics and service technicians (there are no Tesla factories in Sweden). But after an initial meeting between Tesla and IF Metall, summoned by the National Mediation Office, the company’s representatives withdrew from further negotiations, citing corporate policy not to sign collective agreements in any country.

In response to this, IF Metall immediately expanded its strike notice to all repair shops that service Tesla vehicles in Sweden – not only Tesla’s own shops. An additional 470 workers in 16 cities were affected in this next phase of the strike. This measure entailed that no union members in the targeted shops were allowed to do any work on Tesla vehicles, including service, repairs or preparing new cars for shipping to the thousands of customers who are waiting for their brand-new Teslas – Sweden’s top-selling car.

It is important to note that this – and all other solidarity actions in this dispute – is not technically a strike in the Swedish sense of the word. Rather, it is a blockade. This means that the involved workers refuse to perform any Tesla-related tasks, but otherwise do their jobs.

An interesting precedent occurred in 1995 when Toys “R” Us entered the Swedish market and initially refused to sign a collective agreement with the retail union Handelsanställdas Förbund. The company eventually conceded after three months of labour strife, including a number of solidarity strikes when other unions blocked all deliveries, garbage collection, postal service, bank payments and other vital parts of the firm’s operations. The conflict was even supported by unions in other countries, which encouraged their members to boycott Toys “R” Us products.

A vitally important strike

Like the strike against Toys “R” Us, the Tesla strike is seen as being of primal importance for Swedish labour unions in safeguarding the country’s heralded labour market model. One of the model’s institutional pillars is that employers sign collective agreements at the sectoral level, which cover 90 per cent of all employees. Unions and employers alike consider companies that attempt to cut labour costs by refusing to negotiate collective agreements cheaters engaging in unfair competition. Unions also see collective bargaining evasion as a potential risk for downward pressure on wages and working conditions that can harm workers in other companies.

Hence, unions see a risk of contagion to other firms and sectors. The reasoning is that if Tesla were allowed to opt out of the labour market model by refusing a collective bargaining agreement, other firms could start doing the same. In the long run, this could undermine the model itself.

Another reason why the conflict is so important for labour unions is that Tesla is emblematic of the rapidly growing electric vehicle market. Securing collective agreements for jobs created in the industrial transition is one of the most reliable ways to ensure that green jobs will also be good jobs, a vital concern for unions.

The conflict has symbolic significance for Tesla too. The actual costs of a Swedish union contract would be negligible, given that it would only affect about a tenth of one per cent of its 120,000 employees worldwide. But a concession to the union in Sweden could bolster union demands in countries where a larger portion of Tesla’s employees work. In other words, Tesla is also concerned that the strike could have a contagion effect.

The conflict has an international dimension beyond the northernmost corner of Europe. As Johan Järvklo, the International Secretary of IF Metall, has said, “It’s really a global struggle and Sweden is currently at the forefront.” The United Auto Workers are seeking to organize Tesla factories in the United States, and the powerful industrial union IG Metall is attempting to do the same in Grünheide near Berlin, where Tesla’s only European factory is located.

IG Metall has openly expressed its support for the Swedish strike, and its president, Christiane Benner, was pointed in her criticism of Tesla. “You need to be careful. The rules of the game are different here,” she said in reference to the company’s attempts to obstruct union organizing among the 12,000 employees in the Grünheide plant. According to IG Metall, union membership in the Tesla factory is growing “faster than expected,” although still not enough to support a strike.

The dispute escalates

In the month after IF Metall called the strike on October 27, 2023, a series of industrial actions expanded it well beyond the 120 workers initially affected:

• November 3: IF Metall expanded the strike with a blockade of selected repair shops across Sweden, owned by other firms but certified by Tesla. This involved an additional 470 workers, who were still allowed to service other vehicles, but not Teslas.
• November 7: The transportation workers’ union (Transport) issued a blockade against four Swedish ports, prohibiting the unloading of new Teslas arriving on cargo ships.
• November 9: IF Metall announced that it would raise compensation for striking union members to 130 per cent of their wages, to cover costs for pensions, vacation pay and other benefits which the employer would otherwise pay for on top of wages. The money comes from IF Metall’s conflict fund, built up over the years with union dues. As Swedish unions rarely go on strike, many have vast funds that allow them to strike for a very long time, if necessary.
• November 15: The electrical workers’ union (Elektrikerna) launched a blockade of electrical work in 12 repair shops and on all repairs and maintenance at 213 charging stations for Tesla vehicles (“superchargers”) throughout Sweden.
• November 17: The transportation workers’ union expanded its blockade to all of Sweden’s approximately 50 ports, where unloading of Teslas is now at a halt. The building maintenance workers’ union (Fastighets) blocked all cleaning and maintenance in four locations where Tesla has repair shops and offices.
• November 20: The postal workers’ union (Seko) stopped all deliveries by two of Sweden’s largest delivery companies, including mail and spare parts, to and from Tesla repair shops and offices. This included licence plates, which later led to lawsuits from Tesla.
• November 21: The painters’ union blocked 109 repair shops all over Sweden, stopping all auto body work like painting, coating and lacquer.

A key factor that rapidly triggered solidarity action was Tesla’s open and recurring attempts to circumvent industrial action. For example, Tesla immediately started bringing in strikebreakers from other Swedish locations, but also from more than ten other European countries. While legal, the use of strikebreakers is seen as anathema by unions and employers alike. Tesla has also redirected ships to other ports and transported vehicles on passenger ferries instead of cargo ships.

Evading industrial action, especially the use of strikebreakers, has been against the rules and norms in Swedish labour relations ever since the landmark Saltsjöbaden Agreement of 1938. Consequently, labour unions perceived Tesla’s behaviour as an escalation of the conflict and responded by expanding the strike with new measures.

For example, three unions in Denmark, Norway and Finland decided to support IF Metall with formal conflict measures after Tesla tried to evade the Swedish dockworkers’ blockade by shipping cars through ports in neighbouring countries and then hauling them to Sweden with trucks. When these unions blockaded Nordic ports, Tesla responded by shifting to land transports directly from its factory in Germany.

According to Torbjörn Johansson, then chief negotiator of the Swedish Trade Union Confederation (LO), the union strategy has not been to expand the strike to as many workers as possible but to tailor the conflict measures so that they target vital parts of Tesla’s operations. He explained, “We want to find things that make it really hard for Tesla to breathe, eat and live.”

A cat-and-mouse game

Tesla Sweden has made very few public statements. Those few have generally been to this effect: It is unfortunate that IF Metall has taken these measures. Tesla follows Swedish labour market rules, but like many other companies we have chosen not to enter a collective bargaining agreement. We already offer equal or better agreements than those covered by collective bargaining and see no reason to sign any other agreement.

According to IF Metall, however, Tesla’s wages are below the industry average (which is the case in the United States too, reports CNN) and benefits do not match those in the industry’s union contract. Among other things, the collective bargaining agreement offers guaranteed yearly pay raises, an insurance package, retraining and professional development subsidies, additional pension payments, and yearly work time reductions that grant workers more leisure than is stipulated by law.

Elon Musk’s first official response to the dispute came after postal workers blocked the delivery of licence plates for new Tesla vehicles. The Tesla CEO tweeted, “This is insane.” A few days later, Tesla sued the Swedish government agency in charge of producing licence plates and the state-owned postal company in charge of delivering them. After months of litigation, the courts have repeatedly dismissed Tesla’s demands. The lawsuits may drag on for years.

But again, Tesla found a workaround to the postal blockade, transferring ownership to Tesla buyers before licence plates were issued. This allows the new owners to order their plates to be sent directly to their homes, rather than to Tesla’s offices. Also, Tesla has repeatedly changed its address, as union blockades must be filed with the National Mediation Office in writing and specify the employer’s registered name and addresses.

In the ongoing cat-and-mouse game that the dispute has turned into, Tesla has found ways to evade most of the blockades, although arguably with considerable effort and at substantial financial cost.

With 14 unions formally participating, the total number of workers involved in the dispute may be in the thousands, including secondary action (solidarity blockades) in Sweden and abroad. And yet, in the primary dispute, almost half of the 120 mechanics are union members and have joined the strike, according to IF Metall. But at first, this was not the case. It came as a surprise to the union that some of its members chose not to join the strike. Some of these members were therefore expelled from IF Metall, a form of sanction specified in its statute that is almost never used.

Pressures on Musk – but not from car buyers

Despite the conflict’s expansion, Swedish politicians have largely remained neutral, refraining from intervention. The Swedish government has signalled that it will not interfere in the strike. On November 1, 2023, Prime Minister Ulf Kristersson commented, “Swedish legislation is clear and Swedish labour market traditions are clear, so I expect the parties to resolve this the normal way.” A week later, Employment Minister Johan Pehrson said, “We have a model that allows for the measures that are now taken,” adding that it would be “sad” if Tesla were to leave Sweden as a result of the strike. Sweden’s largest newspaper reported that the Ministry of Employment declined a request from a Tesla lobbyist to “inform” the government about the conflict.

Popular support for the strike has been solid. Two early polls showed that between 60 and 70 per cent of Swedes supported the strike, while only 10 to 20 per cent opposed it, with the remainder undecided. In one of the polls, more than half of the respondents said that Tesla’s brand had been harmed by the dispute.

However, public sentiment has not led to reduced car sales. Tesla remains the top-selling car across all categories in Sweden, illustrating the limited impact of the two blockades targeting its car sales: the blockade of Nordic ports and a blockade against a Swedish manufacturing plant operated by a Tesla subsidiary, Hydro Extrusion, which produces a component needed for the production of Tesla’s Model Y in Germany. As a consequence of the blockade, Hydro Extrusion has said it may have to reduce its workforce by 20 of its more than 600 employees, despite the union’s offer to pay the wages of the affected workers until the conflict is settled. Tesla has since moved this production elsewhere, most likely to China.

The dispute has also spurred corporate pressure from investors. A group of 16 Nordic institutional investors wrote a letter to the Tesla board urging the company to sign the union agreement. The Danish pension fund PensionDanmark decided to sell its Tesla holdings, as did the Danish teachers’ pension fund, citing the dispute as the reason.

An effort by institutional investors to pass a shareholder proposal to introduce a collective bargaining clause in Tesla’s Global Human Rights Policy was voted down at the same shareholder meeting where Elon Musk’s substantial pay package ($56 billion USD) was approved. This package had previously been challenged in a Delaware court, which ruled it void.

In a nutshell, Tesla has so far managed to keep its operations going, despite constant union disruption. Elon Musk seems to take this as a sign that the dispute is over. Referring to the strike, he commented, “Actually, I think the storm has passed on that front, I think things are in reasonably good shape in Sweden.”

Of course, this is not the case.

But despite Elon Musk’s hardline anti-union stance, there may be some hope of a pivot in the Swedish dispute. At a New York Times forum in November 2023, Musk made this statement: “I don’t know, maybe we’ll be unionized. If Tesla gets unionized it will be because we deserve it and we failed in some way.” So while he is not thrilled about the prospect of unionization, he does not rule it out.

Part of the reason for his skepticism is that he does not understand what unions do for workers and for the economy writ large. As I wrote in the Guardian in January 2024, “Musk should consider the idiosyncrasies of the Nordic countries with the same interest that he studies car batteries or rocket designs.”

In rankings of the world’s most innovative, competitive and economically free nations, the Nordics consistently come out on top, scoring higher than the United States on most measures. This does not come at the cost of labour unrest, especially in Sweden, which has perhaps the lowest rate of labour conflicts in Europe. Nor does the economic success of Nordic economies and firms come at the cost of huge inequality – the region is perhaps the least unequal in the word.

These idiosyncrasies make the Nordic model socially and economically sustainable and widely supported by both workers and firms. Hopefully, Musk will eventually realize that it makes economic sense to work with the Nordic unions, rather than against them.

Tesla is already unionized

While the Tesla dispute has garnered considerable interest from international media and probably led to an increased understanding of the Swedish labour market model, reporting on Tesla’s situation in other countries with various types of collective bargaining institutions has been surprisingly shallow. It may come as a surprise to Mr. Musk that Tesla is in fact already unionized, but in ways that differ from the use of the term in the United States.

First, unlike in the United States, joining a union is a fundamental right of all Swedish workers. Since more than half of the company’s mechanics in Sweden are union members, Tesla has to negotiate on many issues even without a collective agreement. In fact, in June IF Metall filed a lawsuit against Tesla for failing to inform and negotiate with union members over workplace changes, in accordance with Swedish labour law.

Second, in many European economies, collective bargaining agreements are legally extended to cover all companies in a sector or region through so-called erga omnes (“toward everyone”) provisions. According to the EU Agency Eurofound, only seven member states – , one of them being Sweden – have no legal mechanism for the extension of collective agreements. These extension mechanisms vary across countries, but in countries like Austria, Spain, the Netherlands, Finland and France, almost all firms have to comply with collective bargaining agreements. This means that Tesla is already bound by collectively bargained labour market regulations in European markets.

A third example of how Tesla is more immersed in union regulation that Elon Musk seems to realize is that the company already seems to have local collective agreements. This is highly surprising, given that it has previously been reported that Tesla has not signed collective agreements anywhere in the world. During my research, I have come across at least three local-level agreements between Tesla France and the country’s largest labour union, CFDT. It is possible that Elon Musk is not even aware of the existence of these agreements, two of which are still in effect. It is evident that several European industrial relations systems have incorporated Tesla to a greater extent than previously reported.

How could this insight help resolve the Swedish stalemate? There are lessons for both parties.

Unions should conclude that legislation extending collective bargaining agreements can be decisive in counteracting multinational firms that actively try to undermine workers’ rights. However, erga omnes provisions are not a magic bullet. They do not guarantee compliance from firms, and enforcement of collective agreements is often weak when government oversight is insufficient and union membership is low (Germany is a case in point). Notably, Swedish unions rely on membership strength and have opted against extension mechanisms, as these create a free rider problem for unions (since everyone in a sector is covered regardless of membership) and make it difficult to recruit members.

For Tesla, there are two lessons. First, countries where it operates have very different labour market regimes, rooted in historical legacy, institutional idiosyncrasies and cultural heritage. Tesla should respect these differences, which include abiding by informal rules and norms as well as legislation. The second lesson is that Tesla already complies with collective bargaining agreements through extension mechanisms in many European countries, and has even signed local agreements in France. In the European Union, respecting workers’ rights and collective bargaining institutions is not seen a business obstacle but as a competitive advantage.

Elon Musk may have been instrumental in pushing the fossil-based auto industry toward a green transition. It is now time for him to realize that sustainability is not only an ecological issue, but also a social one.