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Tesla hit with setback as major pension fund offloads its entire stake: 'Verified violations'

Tesla's stocks have remained volatile.

Tesla’s stocks have remained volatile.

Photo Credit: Depositphotos.com

A Swedish pension fund has offloaded all of its Tesla shares, and the move could further shake confidence in a brand that has struggled to live up to expectations this year. 

What's happening?

On June 13, Reuters reported that AP7 had sold all of its Tesla stake, which accounted for around 1% of the equity fund and was around 13 billion crowns (roughly $1.36 billion).

"AP7 has decided to blacklist Tesla due to verified violations of labor rights in the United States," the state-sponsored pension fund said. "Despite several years of dialogue with Tesla, including shareholder proposals in collaboration with other investors, the company has not taken sufficient measures to address the issues."  

Why is this important?

AP7 did not specify which violations it was referring to. However, Teslarati said that Tesla has had "its share of labor lawsuits over the past few years." 

For instance, in 2021, a judge ordered Tesla to pay Owen Diaz $137 million after finding he was subjected to racist abuse while working for the company's Fremont, California, factory. 

After another judge ruled that sum was excessive and some back-and-forth, with Diaz rejecting a lower payout, Diaz and Tesla settled for an undisclosed amount. 

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In 2022, another lawsuit alleged that Tesla factory workers experienced sexist abuse, racism, and other discrimination. A Texas judge dismissed that case, per Bloomberg Law.       

The National Labor Relations Board has also filed multiple complaints against the automaker for allegedly trying to prevent employees from unionizing, per CNBC and CNN.

What could this mean for consumers? 

AP7's decision to blacklist Tesla could add to its struggles to regain its standings in the eyes of consumers who have viewed support for the brand as a political statement amid CEO Elon Musk's increased involvement in politics and the U.S. federal government. 

Tesla's first-quarter sales fell well below expectations, and its stock has remained volatile. Musk's public, insult-laden spat with President Donald Trump also contributed to the fluctuating values and added to the wariness of investors.

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Baird and Argus Research analyst Bill Selesky has called Musk a "lightning rod for criticism" — a statement seemingly supported by a previous Yahoo and YouGov poll in which nearly 40% of respondents said Musk was at least part of the reason they wouldn't purchase a Tesla. 

Some worry that Tesla's image issues will have a chilling effect on the electric vehicle market, as the pioneering brand has become synonymous with the more eco-friendly and cost-effective vehicles, which don't generate tailpipe pollution and have lower energy and maintenance costs. 

However, EV demand is still robust, helping to quell fears that EVs will become less accessible and Tesla will set back progress toward adopting cleaner transport. According to the International Energy Agency, EV sales were up by 35% in Q1 of this year compared to 2024.

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