Subaru said that it has no plan to build its electric cars in the US because it claims it can’t compete with McDonald’s $20-an-hour starting wage.
Since the reform of the federal tax credit for electric vehicles in the US was announced, we have reported on over a dozen announcements from foreign automakers investing in EV production in the country.
It’s due to the new federal tax credit, which includes a protectionist clause that forces automakers to produce EVs in North America to get access to the $7,500 incentive.
The incentive is significant enough that in some lower-end segments, it will be hard to compete without it.
However, we now learn that it is not enough to convince Subaru to invest in electric vehicle production in North America. The reason behind the decision is quite surprising.
In comments about it during the company’s latest financial results release, CEO Tomomi Nakamura said that Subaru is currently not considering building an electric car plant in the US because it can’t compete with McDonald’s wages (via Auto News):
In Indiana, part-time workers at McDonald’s earn $20 to $25 per hour, which is in competition with what temporary workers make at our plant. If we were to build a new plant, it would be very difficult to hire new people for that. Labor costs are rising now. It is quite challenging for us to secure workers for our Indiana plant, including those of suppliers.
Subaru currently operates a vehicle assembly plant in Indiana, where it employs about 6,000 workers to produce the Ascent, Impreza, Legacy, and Outback models.
The automaker only has one electric vehicle for sale, the Subaru Solterra, but it is in partnership with Toyota and basically the same vehicle as the bZ4X.
Like some of its Japanese peers, Subaru is seen as a laggard when it comes to the transition to electric vehicles. It currently only plans to have its own dedicated EV production in 2027 with a new plant in Japan.
I understand that the labor shortage is an extremely difficult situation to navigate right now. That said, I’m not impressed by Subaru’s reason to not produce EVs in North America.
The automaker really can’t figure out how to pay workers more to produce a complex $45,000 product than workers making $5 hamburgers? That’s too difficult of a problem for them?
If it doesn’t work, Subaru is going to have a very tough time competing during the electric shift. The automaker might as well give up on the North American market in about three years if it can’t expand its EV offering.
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Author: Fred Lambert