Tesla boosts pay for U.S. factory workers as UAW momentum builds

Tesla Inc. notified workers at its California car plant of pay increases across its U.S. factories, the latest bump by a nonunion automaker the United Auto Workers is trying to organize.

All U.S. production associates, material handlers and quality inspectors are getting a “market adjustment pay increase” to kick off the new year, according to a flyer posted at Tesla’s facility in Fremont, California. The document viewed by Bloomberg News doesn’t say how much of a raise workers will get. Tesla’s senior director of human resources didn’t respond to questions.

Tesla is joining the likes of Toyota Motor Corp., Volkswagen AG and Hyundai Motor Co. in hiking pay at U.S. plants after the UAW secured historic labor contracts last year for workers at Ford Motor Co., General Motors Co. and Stellantis NV. The union is now parlaying success at the bargaining table into a simultaneous organizing drive targeting Tesla and a dozen other manufacturers, looking to double the number of auto workers in its ranks.

Past efforts to represent staff at other major car companies either were rejected by workers at companies including VW and Nissan Motor Co., or never made it to a vote at Tesla and others.

UAW President Shawn Fain has blamed past failures on corruption within the union, coziness with bosses and bad contracts. After unprecedented strikes at Ford, GM and Stellantis led to historic pay bumps, Fain said the union “can beat anybody.”

Tesla Chief Executive Officer Elon Musk has long been critical of the UAW and unions in general. He’s also increasingly emphasized the importance of cost-cutting, saying many consumers still can’t afford the company’s electric vehicles because rising interest rates have offset repeated price cuts.

Higher pay for production workers will make the “game of pennies” Musk described on Tesla’s last earnings call more difficult. The company has about 140,000 employees globally, roughly half of which are in the U.S.

Tesla’s factory in Fremont alone employs more than 20,000 workers. Employees at the plant have formed a UAW organizing committee, and the union has committed to providing whatever resources are necessary for the campaign there, a person familiar with the endeavor said last year.

The National Labor Relations Board ruled in 2021 that Tesla repeatedly violated labor law during the UAW’s prior organizing efforts, including by firing an activist and suggesting that joining the union would cost workers stock options. Tesla has denied wrongdoing and is appealing the ruling in federal court.