Scandinavia is Tesla’s worst nightmare ever

We wrote about Sweden, and then about Denmark. But now the entire Scandinavia (plus Finland, sorry puritans) is becoming an unexpected battleground for Tesla, with the powerful Norwegian Sovereign Wealth Fund (Folketrygdfondet) leading the charge.

@nordiskbil Elon Musk has a HUGE Scandi-problem #scandinavia #elonmusk #tesla #strike #teslastrikes #scandinaviancountries #denmark #sweden #carsofsweden #norway #norwegian #problems #europe #news ♬ Suspense, horror, piano and music box – takaya

The contagion of a month-long labor struggle began in Swedish ports, spreading to Denmark, Norway, and, most recently, Finland. Workers across various sectors are rallying in solidarity with the 10% of the 130 metalworkers from seven Swedish workshops demanding a contract based on collective bargaining covering fundamental rights such as pay levels and working hours.

This proposition challenges the narrative of Tesla, the least unionized automaker in the Western world, which claims to offer even better conditions to its employees. However, the feeling is different in Sweden and its neighboring countries.

Elon Musk still talks about “madness”

Elon Musk, describing the situation as “madness,” finds himself confronting a deep crisis in a region known for its enthusiasm for electric vehicles. In Norway, where the internal combustion engine is becoming a rarity in new registrations, comprising only 9%, including hybrids, with petrol at 1% and diesel at 2%, the market is a stronghold for electric vehicles. Notably, 91% of car purchases consist of electric vehicles, reflecting a robust commitment to sustainable transportation.

Image: TT News Agency

Tesla faced a setback on Thursday, as a Swedish court conveyed that the halt on the delivery of license plates due to the labor protest would not be lifted until a final decision is reached. This effectively freezes vehicle deliveries to customers in the fifth-largest European market for Tesla.

In 2022, Tesla sold around 35,000 vehicles in the Scandinavian + Finnish region, with 21,000 in Norway (15% of the electric vehicle market), 9,200 in Sweden (10%), 3,000 in Denmark (10%), and 1,700 in Finland (11.7%). Although the situation has impacted Tesla’s deliveries in Scandinavia, the company sold 1.3 million vehicles globally in the first three quarters of the year, surpassing the total for 2022.

Moreover, the Norwegian Sovereign Wealth Fund, managing $1.5 trillion, has weighed in, emphasizing that Tesla should respect fundamental labor rights, including collective bargaining.

Norges Bank Investment Management, the fund’s manager, is Tesla’s seventh-largest shareholder with an 0.88% stake valued at approximately $6.8 billion. NBIM stated that companies they invest in should respect human rights, including labor rights, and highlighted their support for a 2022 shareholder proposal urging Tesla to adopt a labor rights policy, which received 32% support.

(Johan Nilsson/TT News Agency via AP, File)

Investor sentiment is also shifting, with PensionDanmark reportedly selling Tesla shares worth around $58 million. PensionDanmark, with over 800,000 members and $45 billion in total assets, took action following the lead of the Danish labor union, 3F, which is a key player in the ongoing strike.

In Sweden, the joint ethical council of state pension funds (AP funds), with a combined portfolio of approximately $247 billion, has reached out to Tesla to discuss workers’ rights, closely monitoring developments. Meanwhile, the CEO of another Danish fund, AkademikerPension, managing around $24 billion, stated that Tesla’s stance on workers’ rights prompted the fund to place the company under observation.

The labor dispute could have broader implications for Tesla, extending beyond the immediate delivery freeze in Scandinavia. As investors become increasingly concerned about Tesla’s ability to navigate labor relations and ensure a reasonable return, the company faces challenges on multiple fronts. Additionally, Tesla is dealing with safety issues in California, with regulatory fines related to workplace safety violations.

As the saga unfolds, Tesla’s approach to labor rights is being closely scrutinized, posing potential risks to the company’s operations and investor confidence in the long run. The fight in Scandinavia highlights the growing importance of ethical considerations and responsible labor practices in shaping the future of global corporations.

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