One of the easiest ways for automakers to save money on production and importing products to the United States is to just…move here. Eliminating overseas travel and a host of other obstacles means vehicles are in the hands of consumers more quickly. Unfortunately, Subaru isn’t bringing electric vehicle production to the United States. Automakers always refuse to build cars in certain countries, so this is nothing new. However, the reason Subaru won’t build here is surprising. Subaru’s CEO recently cited McDonald’s wages as why the automaker can’t build its electric cars in the U.S.
Subaru electric cars won’t be built in the U.S.
According to a report from Fox Business, Subaru isn’t investing in U.S. EV production because McDonald’s employee’s pay is too high. The automaker began selling its first EV in the U.S. this year, but production occurs overseas. Like many Subaru models, the Solterra is a collaboration with Toyota, manufactured in Japan. However, Subaru owns a factory in Indiana, home of the Outback, Legacy, Impreza, and Ascent. Nearly the entire Subaru lineup is built in Indiana, so why won’t the company start making EVs?
Due to the Inflation Reduction Act (IRA), the Solterra no longer qualifies for federal tax credits. Vehicles are now required to be built in America to qualify. Most automakers are planning to ramp up production in the United States to take advantage of this tax credit. Subaru is going the opposite way, choosing not to build its EVs in America, citing McDonald’s wages as the reason why.
“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,” CEO Tomomi Nakamura said during the automaker’s latest earning’s call on Wednesday. “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.”
How much do Subaru plant workers make?
The same report by Fox Business says Subaru’s Indiana facility employs over 5,900 associates. Their salaries range from $17 to over $48 per hour. As a result, Nakamura says Subaru will start a plant for electric vehicles in Japan but not the U.S. Instead, the automaker will wait until the U.S. “wage inflation” subsides.
“It is very difficult for us to respond to. There are a number of requirements,” Nakamura said of the new EV tax incentive plan in the U.S. “We find it difficult to figure out how the IRA will help us bring benefits to our customers.”
In short, the CEO of Subaru does not think it’s worth paying factory workers more than McDonald’s employees. According to Minimum-Wage.org, the minimum wage a worker in Indiana can get paid is $7.25 per hour. Indeed lists the most common pay for McDonald’s employees in the same state as $11.69 per hour for a crew member. However, the CEO of Subaru claimed part-time workers in the area average $20 to $25 per hour. Indeed says the highest average salary for any McDonald’s employee in Indiana is $50,562 annually for the General Manager, equating to about $24 per hour.
McDonald’s prevents Subaru from building electric cars in the U.S.
In conclusion, Subaru refuses to build its electric vehicles in the U.S. The CEO of Subaru claims it’s because wages for McDonald’s employees in the Indiana area are far too high. Attempting to match or outdo McDonald’s wages is too much for the automaker, which made $27.5 billion in revenue in 2021, according to Forbes. Furthermore, Subaru electric vehicles in the U.S. will not qualify for a federal tax credit due to the new Inflation Reduction Act.