Subaru isn't investing in US EV production because McDonald's pay is too high
Inflation making it tough to hire workers
Subaru began selling its first electric vehicle in the U.S. this year, but it's not made in America.
The Solterra is a collaboration with Toyota that's currently manufactured in Japan rather than at the factory in Indiana that produces the Subaru Outback, Legacy, Impreza and Ascent.
That means it no longer qualifies for any federal tax credits under the new rules established by the Inflation Reduction Act (IRA), which requires vehicles to be built in North America.
But while several automakers are planning to ramp up production in the region to take advantage of the incentives, Subaru won't be joining them anytime soon for an unusual reason.
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CEO Tomomi Nakamura unveiled the Solterra last year. (Toru Hanai/Bloomberg via Getty Images)
You could say it has a beef with McDonald's.
"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, Automotive News reported.
"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."
McDonald's wages are competing with Subaru's in Indiana. (Jakub Porzycki/NurPhoto via Getty Images)
According to Indeed and Glassdoor, salaries at Subaru's Indiana facility, which employs over 5,900 associates, range from $17 to over $48 per hour.
Nakamura said Subaru is planning to be operating its own electric vehicle facility in Japan by 2027, but won't consider adding one in the U.S. until wage inflation begins to subside.
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"It is very difficult for us to respond to. There are a number of requirements," Nakamura said of the new EV incentive plan.
Subaru employs over 5,900 workers at its Indiana facility. (Daniel Acker/Bloomberg via Getty Images)
"We find it difficult to figure out how the IRA will help us bring benefits to our customers."
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Subaru isn't having any trouble selling its other cars right now. It has a backlog of 48,000 orders due to the ongoing supply chain issues and just a 10-day supply of inventory at its dealers. Nakamura is confident that production will return to pre-pandemic levels within the next six months.