The recent vote to unionize Volkswagen workers in Tennessee may signal that America’s electric vehicles are destined to be made by union labor — an outcome that would represent twin successes for President Joe Biden.
Last week’s vote was historic, marking the first time that the United Auto Workers has successfully organized a foreign automaker’s factory in the U.S. Southeast. The UAW’s success punctured the long-held belief that unions can’t win in the South — a premise that made the region a magnet for foreign auto brands that sought the lowest possible labor costs.
“The union has broken the glass ceiling that unions could not organize in the South,” said Harley Shaiken, a professor emeritus who studies labor issues at the University of California, Berkeley. “This could become a forerunner for the role that the UAW and unions will play in the transition to EVs.”
The UAW won 73 percent of the vote after failed attempts to unionize in 2014 and 2019. The strong support, Shaiken said, is akin to putting “a union label on an EV made in the United States” — namely, Volkswagen’s ID.4 SUV, which is made in the plant.
The vote added a new dimension to a heated political debate over whether the growing EV market and the strengthening labor movement would help or hurt each other. Before the Volkswagen vote last week, six Republican southern governors issued a statement asserting that unionizing the plant “would certainly put our states’ jobs in jeopardy.”
But Biden has linked his climate policies — including his push to increase domestic EV production — with “good-paying” union jobs.
Shortly after the vote totals were made public, Biden said in a statement that he was “proud to stand with auto workers now as they successfully organize at Volkswagen” and derided Republicans’ efforts “to weaken workers’ voice.” Last year, Biden became the first president to join a picket line as the UAW waged a successful drive for a better contract with the Detroit Three automakers: Ford, General Motors and Stellantis, the maker of brands like Jeep and Dodge.
The electric vehicle is a centerpiece of Biden’s economic agenda, reflected in his signature Inflation Reduction Act, which contains numerous incentives to build and buy EVs domestically. Supporting organized labor is a near-equal priority. And in fact, an earlier version of what became the IRA tied its incentives not to EVs, but to union membership.
The successful unionization drive at Volkswagen “does mean that the framework that the IRA tried to create is taking hold in places outside of the Midwest,” said Nick Nigro, the founder of Atlas Public Policy, an EV data analytics shop based in Washington, D.C.
A victory at VW
A total of 3,613 workers, or 83 percent of the employees at the plant in Chattanooga, Tennessee, voted over a period of three days, according to Volkswagen, which in a statement thanked its workers for voting. Workers voted 2,628 to 985 to join the UAW.
“I was surprised by the margin,” said Dan Gilmore, a labor attorney and an adjunct professor at the business school of the University of Tennessee’s campus in Chattanooga.
The UAW and local organizers expressed optimism ahead of the vote. They rode a wave of pro-union publicity after the UAW’s wins in its labor negotiations last year with the Detroit Three automakers.
“They created so much positive momentum for themselves. It gave them some current ammunition,” Gilmore said. “The timing for them was great.”
In 2022, Volkswagen became one of the first foreign automakers to start making electric vehicles domestically. The company spent $800 million to add two new buildings to assemble both the vehicles and their batteries. The resulting car — ID.4 SUV — sold almost 38,000 units last year, putting it in the mix of traditional automakers challenging Tesla in EV sales.
Renee Berry, a 14-year veteran at Volkswagen who delivers parts to the assembly line and who served on the union organizing committee, said that the company pushed back less against union activities than it did during the prior organizing attempts.
The specific benefits that unionization will bring won’t be known until VW and the UAW local agree on a contract — a lengthy process that often gets combative.
“It will change my life because for one we have a voice,” Berry said. “When I go in front of [human resources] with my union rep, I don’t have to worry about getting fired.”
The next test
The next organizing challenge for the UAW is at Mercedes Benz Group, which operates both an auto-assembly plant and a new battery-assembly plant outside of Tuscaloosa, Alabama.
The Mercedes vote, scheduled for mid-May, will be more challenging. But if UAW is successful, it could prompt union efforts to take hold at a string of EV plants — and possibly even battery plants — across the South.
Gilmore said that unlike officials at Volkswagen, Mercedes’ management seems more keen to fight unionization.
“It appears that Mercedes is not the soft target that VW was,” he said.
Mercedes says it has 6,100 workers at its assembly plant, which produces both gas-fueled vehicles and two electric sedans, the EQS and the EQE.
After scoring victories against the Detroit Three last year, the UAW set its sights on unionizing 13 nonunionized automakers. Those that remain after Volkswagen and Mercedes are the European automakers BMW and Volvo; Japanese brands Toyota, Honda, Nissan and Subaru; South Korea’s Hyundai and Kia; and all-electric automakers Tesla, Rivian and Lucid.
The concessions that the Detroit Three made to the UAW prompted worries that it could raise the costs of EVs. Volkswagen’s conversion into a union shop carries a different sort of threat — that a contract that raises worker wages and benefits could shift the company’s automaking abroad.
“You’re going to see a rise in the cost of producing EVs. There’s no way of escaping that,” said Marick Masters, who studies labor issues at the business school at Wayne State University in Detroit.
“They may worry whether these rising costs will make them uncompetitive in relation to others making EVs,” he added, specifically calling out automakers in China, which are making electric vehicles far more cheaply than other companies.
Are battery plants next?
So far, the UAW hasn’t announced any specific plans to target factories that make EV batteries or their components. But it has made some initial moves in that direction.
Most of these plants are organized as joint ventures with Asian battery-makers like Japan’s Panasonic and South Korea’s LG Energy Solution and SK On. Many are based in the U.S. South, as automakers and battery makers have been drawn by a combination of generous local incentives and the promise of an inexpensive, nonunionized workforce.
One of the UAW’s wins in its negotiations with the Detroit Three last year was a concession by General Motors that it could organize at its joint-venture battery plants. So far, only one, in Warren, Ohio, has voted for union representation and has a signed contract.
But others are likely coming.
“The labor movement as a whole is looking at the entire value chain of batteries,” said Jason Walsh, the executive director of the BlueGreen Allliance, a nonprofit that advocates on both labor and environmental issues.
“Everyone understand that this value chain goes pretty far upstream,” he said.
