Why Tesla isn’t unionized

By Nathaniel Meyersohn, CNN

New York (CNN) — Tesla has beaten back previous efforts by workers to unionize – but the United Auto Workers hopes a successful strike against Ford, General Motors and Stellantis could help it organize at Tesla.

UAW membership has declined in recent decades, and the auto industry is moving to electric vehicles. EV battery and production plants thus far in the United States are mostly non-union. To grow, the UAW will have to make inroads at EV plants.

“Tesla is the biggest threat in the long term to UAW wages and benefits. UAW doesn’t have any choice but to take on [Tesla],” said John Logan, a professor of labor and employment studies at San Francisco State University.

Tesla controls around 60% of the electric vehicle market in the United States, and Detroit and foreign automakers in the South are racing to catch up. Tesla workers earn on average about $55 an hour in wages and benefits, compared to $66 to $71 an hour at Detroit’s Big Three, according to industry estimates.

Workers have attempted to organize at Tesla at least three different times. But the company, led by Elon Musk, has been difficult for unions to break into because of weak protections for labor organizing in the United States; Tesla’s aggressive tactics; and Tesla’s strategy of granting factory workers stock options, a rarity in the auto industry.

“Tesla will go to extraordinary lengths to prevent unions,” Logan said.

Tesla did not respond to CNN’s request for comment.

Unionizing in America

Unionizing in the United States is much harder than in most other countries.

European countries have sectoral bargaining, where unions and employers negotiate over contracts for entire sectors of the economy or classes of workers. In the United States, however, individual employers and unions bargain over contracts.

“It’s a real uphill battle to unionize in the United States,” said Risa Lieberwitz, a professor of labor and employment law in the Cornell University School of Industrial and Labor Relations.

To unionize a workplace, labor organizers must get at least 30% of workers to sign union cards. After reaching that threshold, the National Labor Relations Board oversees a union vote. Companies often try to persuade workers against voting in favor of a union, hiring “union-avoidance” consultants to dissuade employees and weaken workers’ unionization efforts.

Even if a majority of workers casts ballots in favor of a union, negotiations on pay, benefits and other areas can drag on for years.

Employers also generally face insufficient deterrents for violations of workers’ rights to organize under the National Labor Relations Act, which forbids employers from interfering with workers’ right to organize or form a union, Lieberwitz said.

Many employees, hired at will, avoid union activities for fear of retaliation.

“Under the law, companies do have an advantage. They have complete economic power over employees,” she said.

Hostile to unions

Tesla has more than 120,000 workers worldwide and production facilities in the United States in Fremont, California; Austin, Texas; Sparks, Nevada; and Buffalo, New York.

The company has taken a forceful anti-union position.

The NLRB has repeatedly cited Tesla and Musk for illegal or improper anti-unionizing activities, such as interrogating employees and disciplining or otherwise discriminating against employees because they support unionizing.

Tesla this year fired more than 30 supporters of a nascent union at its Buffalo facility, just days after the organizing effort was announced.

The union, Tesla Workers United, filed an NLRB complaint alleging the company illegally fired its supporters. (Tesla said in a blog post allegations that it terminated employees in response to a new union campaign were false, and the company attributed the firings to poor performance reviews.)

Last year, the NLRB said it was unlawful for Tesla to prohibit employees from wearing shirts bearing union logos and insignia.

Musk has also been vocal about his opposition to unions and faced the ire of the agency when it directed him to delete a 2018 tweet saying employees would lose their stock options if they formed a union.

“These are typical kinds of unfair labor practices that send a very clear message to employees that their employer is watching them. That can kill or discourage employees from engaging in union activities,” Lieberwitz said.

Musk, who is the world’s richest man and owns social media platform X, SpaceX and other companies, stands as a deterrent to unions, she said.

“Musk gets a lot of attention because of his bravado — that may dial up the level of fear employees have,” she said. “They have this anti-union activity surrounding them.”

Making it harder to unionize, Tesla offers production workers stock options, which typically have a vesting period of four years, so employees must remain at Tesla to cash them in. Tesla is one of the most valuable companies in the world, and some production workers have become millionaires from their shares in Tesla, Musk has said.

Tesla’s stock had its worst year on record in 2022, losing 65% of its value, weakening the significance of stock options for employees. But the stock has bounced back this year, more than doubling in 2023.

“Tesla tries to make it seem like if you’re unionized you’re not going to get stock,” said Bryan Schwartz, a lawyer who has represented Tesla employees in lawsuits against the company, including an ongoing class action lawsuit for racial discrimination. (Tesla has called the lawsuit a “hotbed of misinformation.”)

If employees voted to be represented by a union, it’s clear that the valuable stock options that they had already been granted could not be revoked, experts say.

Taking on Tesla

The UAW looks poised to take another shot at organizing Tesla under new, more aggressive leadership and strong public support for unions.

“Workers across the EV and battery industry, including at Tesla, are talking about forming unions to ensure that the green energy transition provides quality jobs,” said Mike Miller, a regional director at UAW.

Miller declined to share more details on the effort at Tesla.

If UAW is able to secure a strong contract at the Detroit automakers, it could be a strong recruiting tool to organize Tesla workers and the EV industry, experts say.

UAW president Shawn Fain, who frequently denounces the “billionaire class,” recently called out Musk in what could be a precursor to a more sustained campaign against Tesla.

“Most of these workers in those companies are scraping to get by so that greedy CEOs and greedy people like Elon Musk can build more rocket ships and shoot [themselves] into outer space,” Fain said on CBS. “And that’s unacceptable.”

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