AFT Warns Tesla Investments Could Risk Workers' Pension Security

AFT Urges Asset Managers to Reevaluate Tesla Investments

NEW YORK—In a significant move, the American Federation of Teachers (AFT) has called on major asset managers to reassess their investments in Tesla amid concerns over the company's financial stability. AFT President Randi Weingarten has sent a letter to the CEOs of leading investment firms, including Blackrock, Vanguard, State Street, T. Rowe Price, Fidelity, and TIAA, highlighting the urgent need for action as Tesla's stock continues to plummet, having dropped 23 percent this year compared to the Nasdaq's 1.3 percent decline.

The AFT, whose members’ deferred wages are invested in pension funds amounting to around $4 trillion, has expressed grave concerns over the exposure these pensions have to Tesla shares. These funds, along with personal savings of teachers and nurses in direct contribution plans, are managed by the aforementioned investment firms.

Comprising over 50 members, the AFT Trustee Council includes representatives from 27 public pension funds, among them some of the largest in the U.S., such as the California State Teachers’ Retirement System and the New York State Teachers’ Retirement System. The AFT has historically provided resources for trustees to evaluate investments, particularly in companies with reputational risks.

AFT President Randi Weingarten commented: “This is about safeguarding workers’ retirements. Less than a month ago, when J.P. Morgan analysts wrote that Tesla shares ‘continue to strike us as having become completely divorced from the fundamentals,’ we got concerned. And we’ve gotten more and more worried as the days and weeks have worn on, because we’re talking about working people’s deferred wages and retirement income. Just this week, we saw Tesla stock continue to sink faster than a Cybertruck in quicksand, as European sales fell off a cliff. So, we knew we needed to act.”

Weingarten's letter emphasizes the alarming nature of Tesla's recent financial disclosures, noting a substantial decline in profits. Tesla reported a 23 percent decrease in year-over-year profits for the fourth quarter of 2024, with operating income at $1.6 billion. The company's profit margin on vehicles also fell to 13.6 percent, missing expectations and highlighting increasing cost pressures.

The AFT is seeking a detailed response from asset managers regarding their evaluation of Tesla's valuation and the actions they are implementing to safeguard the retirement savings of AFT members.

The full letter can be accessed here.

The AFT represents a diverse group of 1.8 million members, including educators, healthcare workers, and government employees, all of whom rely on pension funds for their future financial security.

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