Tesla Has Bitten Off More Than It Can Chew by Picking a Fight With Swedish Unions

Elon Musk is attempting to expand Tesla into Sweden and circumvent its unions — but Swedish labor has a long history of taking on big US firms. If they can bring Tesla to heel, it will mark a major victory for organized labor across the globe.

A general view of a Tesla assembly plant building. (Dean Mouhtaropoulos / Getty Images)

Since the end of October, mechanics at Tesla workshops in Sweden have been striking in an attempt to pressure the firm to agree to collective bargaining with the Swedish Metalworkers’ Union.

Tesla does not manufacture cars in Sweden, so the strike covers only 130 workers. Despite the small number of affected workers, this has become a very prominent strike in the region because it pits two powerful parties against one another.

On one side is Tesla, by far the world’s most valued automaker, currently valued higher than the next nine car companies combined. It boasts 130,000 workers and the top two best-selling EV models. On the other side is the Swedish Metalworkers’ Union, a union with 230,000 members organizing 80 percent of all workers in its sectors. With a large membership that has not taken party in many strikes, the union has amassed a war chest of about $1 billion. It is able to pay the striking workers 130 percent of their salaries.

If either side caves, it will have profound impacts across Sweden. If the unions lose, it might spell the end of the Swedish norm-based labor market system of high unionization rates, sectoral bargaining, and few regulations (there is, for example, no minimum wage in Sweden as most employers simply pay the wages agreed in negotiations with the unions). If Tesla loses, it will be the first union with which the company has been forced to negotiate.

Recognizing these stakes, several other sectors have started sympathy strikes. The transport workers are now refusing to unload Teslas in Swedish ports, the construction workers are not doing repair work on Tesla facilities, and the postal workers are not delivering mail, including license plates to Tesla. The latter strike was branded as “insane” by Elon Musk on Twitter/X.

Sympathy strikes are spreading across the Nordic region. The Danish Transport Workers’ Union, the Norwegian United Federation of Trade Unions, and the Finnish Transport Workers’ Union have promised not to deliver Tesla cars bound for Sweden. The Danish labor-run pension fund PensionDanmark is divesting their $57 million stocks in Tesla.

Context and History

So far, the Swedish employers’ association, Swedish Enterprise, is taking the side of Tesla, which is a remarkable turn. Tesla is not even a member of Swedish Enterprise and their decision to side with a rogue nonmember is actually undermining their own members that have agreed to the terms set in negotiations with the unions.

This weakens the notion that the association is actually really interested in the Swedish model of equal competition for all industries based on organized negotiations with unions. Instead, it seems that the Swedish Enterprise views Tesla as a potential capital avant-garde — setting business free from its bounds within the Swedish model.

Historical perspective does not provide grounds for belief in the potential success of  Musk and Tesla’s strategy in the Nordic region.

There is a long tradition of Nordic workers and unions taking on and defeating big American firms. Notable instances include Toys’R’Us in Sweden and McDonald’s in Denmark, in which unions compelled both companies to sign onto the collective agreement system following prolonged and hard-fought strikes.

In other cases, companies that have clashed with unions found themselves ousted from Nordic markets after refusing to enter into agreements. Uber was forced to leave Denmark after union lobbying resulted in new taxi legislation, forcing the company to comply with labor regulations and treat drivers as employees. Discount airline Ryanair chose to cease operations at the heavily unionized Copenhagen Airport rather than sign a collective agreement.

The strength of Scandinavian unions is particularly evident when facing a single unorganized company. Leveraging sympathy conflicts, unions can mobilize the entire organized workforce, disrupting essential services such as garbage collection, transportation, maintenance, and repairs. This formidable power makes it challenging for companies to sustain profitable operations.

Consequently, most major employers in industry, transport, and manufacturing opt for the protection of a collective agreement. This agreement allows unions to use the strike weapon only if negotiations break down during the bi-yearly central wage negotiations, providing a level of industrial peace with stronger guarantees compared to less organized labor markets.

The union’s position is still so strong in the Nordic labor markets that they can maintain the level of wages and benefits without state intervention. Consequently, Nordic unions have actively advocated against a common EU minimum wage, fearing it would undermine the strength of the collective agreement system and leave workers vulnerable to shifting political winds.

The State of the Nordic Union Movement

We should, however, be careful to avoid romanticizing the Scandinavian labor market regulations. While the unions remain strong, they are not the fighting organizations they once were. The number of strike days has decreased significantly, and the political influence of union leaders is far from the zenith witnessed in the 1970s and ’80s. During those decades they were able to directly push the government to put the union proposal into law, such as the wage earner fund, which redirected company profits to state-owned farms capable of buying up private enterprises.

Today union density is down; in Sweden it has fallen to 62 percent, compared to 86 percent thirty years ago, with comparable reductions in the other Nordic countries. The loss of organized cadres and experienced shop stewards is likely even more substantial. Additionally, unions have largely embraced the notion that sustaining the Nordic model requires restrained wage growth below productivity levels, enabling greater competitiveness on the international stage.

Described by political economist Magnus Ryner and Erik Bengtson as competitive corporatism, this arrangement involves major industries and unions in the export sector, notably the Metal Workers’ Union, reaching an agreement on labor market strategy.

In the contemporary landscape, the union movement is predominantly oriented toward engaging in formal negotiations within legal frameworks rather than adopting a rank-and-file-based organizational structure rooted in direct action. Despite historical precedents seemingly favoring Swedish and Nordic workers, questions persist regarding the union movement’s capability to sustain and win a prolonged shop-floor conflict.

What Are the Implications for the Climate Struggle?

The fight for a unionized EV sector may be the starting point of a wider European labor struggle over emergent green capitalism.

To keep the rise in global temperatures within relatively safe limits, fossil fuel as the energetic foundation of capitalism has to be replaced with clean energy. On the one hand, this transformation is an opportunity for capital to strengthen its position. By simply not allowing workers to organize unions in “green” production, the phaseout of fossil fuels could also become the phaseout of worker power.

The unions understand this, which is why the European Trade Union Confederation expressed concern that the EU’s response to the Biden administration’s Inflation Reduction Act — the so-called Net-Zero Industry Act — has no similar labor provisions.

On the other hand, if the green transition can become synonymous with expensive cars for rich people, and poor wages and working conditions, it will also be easier to politically undermine and slow down the green transition itself. This is exactly the tactic that Donald Trump and the US Republican Party used against the United Auto Workers strikes. In the lead-up to and during the strike, both argued that the EV transition was hurting American autoworkers. The European right, attempting to draw a cleavage between environmentalism and labor, have also voted down any provisions for worker protections in the European Parliament.

However, an offensive left may aim for not only safeguarded but improved working conditions in the green transition to instead generate a positive political feedback loop between climate action and worker power.

There are three possible resolutions to the strikes. One is that the unions give up their attempt to unionize the Tesla workshop after a prolonged conflict. Without government interference, this is unlikely given the stakes for the union movement.

Another is that Tesla caves and signs an agreement. This is the approach that virtually every company has taken in modern labor conflict history in Scandinavia. Shareholders might also put pressure on Tesla to avoid prolonging the conflict.

A third option, which is not at all unlikely given Musk’s erratic behavior, is that Tesla withdraws from the Scandinavian markets. However, a withdrawal would not be a loss for the unions. Where lack of access to certain products or providers might be inconvenient for consumers, it still means that the organized labor market and the national floor under wages and conditions is protected.

While the Tesla strike is affecting rather few workers, it may have significant implications, both for labor relations and for the politics of the green transition. For example, the consequences may be vast if the strikes spread to Tesla’s plant outside Berlin, Germany, which employs ten thousand workers and builds three-quarters of all vehicles sold in the region.

In that case, the struggle of Swedish mechanics, though a small nuisance for Tesla, might end triggering a wave backlash against a firm that has, thus far, had a free hand to act as it wants.