Labor Dispute

Tesla Sparks Union Fight

Tesla Chief Executive Elon Musk attends a forum on startups in Hong Kong
Source: Reuters/Bobby Yip

Tesla Motors boss Elon Musk has taken his first jab against Germany’s most powerful union, IG Metall. While the electric carmaker’s aim is to bring its vehicles to the masses with its the Tesla Model 3, “I do not believe IG Metall shares our mission,” the tech billionaire said in a letter to around 680 German employees, according to German news agency DPA.

Employees of Tesla’s industrial robotics unit, the German firm Grohmann Engineering, are threatening to strike. IG Metall union representation says it wants to renegotiate for higher salaries and job security after other clients were dropped by the electric automaker. Grohmann Engineering was acquired by Tesla in November 2016.

Germany’s unions appear to be making an example out of Tesla, whose ultimate mission is to deliver sustainable energy globally. As carmakers in Germany shift away from traditional combustion engines, the country’s top unions say the jobs they represent are threatened. Though in the letter to Grohmann workers on Tuesday, Mr. Musk reportedly promised not only job security, but expansion of the robotics unit.

“I would like to undoubtedly assure everyone of Tesla Grohmann that we will not be able to reduce our workforce or make redundancies for the foreseeable future, and certainly not for the next five years,” he wrote. “Even after these five years, we expect further growth at Tesla Grohmann and no staff reduction.”

Tesla had also already offered an immediate €1,000 bonus to each employee, an extra €150 a month and €10,000 of Tesla shares distributed over four years. IG Metall has stated this is not enough, claiming wages are a good 30 percent below union rates, and are reportedly keen to move right to collective bargaining.

Based in Prüm, a small town near the Belgian border, the plant specializes in automating factory production, which is essential to the upcoming release of the Tesla Model 3. Investor confidence is counting on the world’s first mass-market electric car, priced at $35,000, which the company hopes will launch the brand from the luxury sector into the mainstream.

Mr. Musk urged employees for talks with the works council “to ensure that the remuneration of each individual employee is competitive,” the letter read. “As a result, every Tesla-Grohmann employee will have the chance to earn considerably better wages and shares than is usual in the industry and relative to the cost of living in Prüm.”


Barbara Woolsey is a writer for Handelsblatt Global in Berlin. To contact the author:

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