In response to the United Auto Workers union's organizing efforts in its U.S. plants, Tesla is set to increase employee pay, offering factory workers a much-anticipated wage hike this year.
On Thursday, the United Auto Workers (UAW) reported that Tesla employees have informed the union about the company's statements regarding pay raises. However, these statements lacked specific information about the extent of the wage increases.
Tesla to Raise Wages for Employees
Tesla is set to raise wages for all material handlers, quality inspectors, and production associates, although the exact details of the pay increase have not been disclosed.
In December, CNBC-TV reported Tesla's plan to implement a 10% pay raise for most hourly workers at its Nevada gigafactory starting in January.
This move aligns Tesla with other major automakers that have recently increased wages for their workers. Notable developments include new labor agreements between the United Auto Workers (UAW) and companies like Ford Motor Co., Stellantis NV, and General Motors Co., as well as wage hikes at Hyundai Motor Co., Toyota Motor Corp., and Volkswagen AG.
It's worth noting that Tesla's CEO, Elon Musk, has previously expressed opposition to the UAW and labor unions. During the company's recent quarterly financial call in October, Musk emphasized Tesla's commitment to reducing costs to maintain the affordability of its vehicles.
Musk said, "It's like Game of Thrones but pennies. If you've got a $40,000 car and roughly 10,000 items in that car, that means each thing, on average, costs $4. So, to get the cost down by 10%, you have to get 40 cents out of each part on average. It is a game of pennies."
Musk expressed the difficulty of controlling costs, likening it to tunneling with a spoon.
Despite facing challenges like factory idle expenses and the launch of new factories, Tesla's team further decreased the cost per vehicle. Musk highlighted that there is still room for significant improvement in this regard.
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Tesla to Increase Employee Pay Amidst UAW Organizing Drive
After successfully securing robust contracts with Detroit's three major automakers last year, the United Auto Workers (UAW) has embarked on an ambitious mission to organize nonunion auto plants throughout the United States, including Tesla's assembly and battery facilities in Texas, California, and Nevada.
The move to increase pay for Tesla employees follows a trend set by nearly all nonunion auto plants after the ratification of UAW contracts.
The UAW's organizing efforts extend to more than a dozen U.S. plants operated by Toyota, Honda, Hyundai, Nissan, Subaru, Mazda, Volkswagen, Mercedes, BMW, and Volvo, and electric vehicle startups like Rivian and Lucid. Based in Austin, Texas, Tesla is also on the union's radar.
UAW President Shawn Fain has coined the term "UAW bump" to describe the raises provided by nonunion automakers, suggesting that they are an attempt to hinder union organizing endeavors.
Fain stated, "As great as these raises are, they still fall far short of what the companies can afford and what autoworkers are worth," in response to the Tesla pay increase announcement.
As reported by Bloomberg News, Tesla plans to implement a "market adjustment" pay raise for production workers, material handlers, and quality inspectors.
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