Subaru won’t build electric cars in the US because it can’t compete with McDonalds wages

Subaru said it has no plans to build its electric cars in the United States because it claims it can’t compete with McDonalds’ starting $20-an-hour wage.

Since the announcement of the federal electric vehicle tax credit reform in the United States, we have reported more than a dozen announcements from foreign automakers investing in the production of electric vehicles in the country.

This is due to the new federal tax credit, which includes a protectionist clause that requires automakers to produce electric vehicles in North America to access the $7,500 incentive.

The incentive is big enough that in some low-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 the production of electric vehicles in North America. The reason for the decision is quite surprising.

In comments on the matter during the company’s latest financial results release, CEO Tomomi Nakamura said Subaru has no current plans to build an electric car factory in the United States because it cannot compete with McDonalds salaries (via Auto News):

In Indiana, part-time workers at McDonald’s earn between $20 and $25 an hour, which competes with what temporary workers at our plant earn. If we were to build a new factory, it would be very difficult to hire new people for it. Labor costs are increasing now. It is quite difficult for us to find workers for our Indiana plant, including those from suppliers.

Subaru currently operates a vehicle assembly plant in Indiana, where it employs approximately 6,000 workers to produce Ascent, Impreza, Legacy and Outback models.

The automaker only has one electric vehicle for sale, the Subaru Solterra, but it’s partnered with Toyota and essentially the same vehicle as the bZ4X.

Like some of its Japanese peers, Subaru is considered a latecomer when it comes to the transition to electric vehicles. It currently only plans to have its own dedicated electric vehicle production in 2027 with a new factory in Japan.

Electreks takes

I understand that the labor shortage is an extremely difficult situation to manage at the moment. That said, I’m not impressed with why Subarus doesn’t produce electric vehicles 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? Is it too difficult of a problem for them?

If that doesn’t work, Subaru will struggle to compete during the switch to electric. The automaker might as well drop out of the North American market in about three years if it can’t expand its electric vehicle offering.

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