Folksam said that Tesla's approach to its employees' rights to unionise was "problematic" given its investment criteria, and that attempts to influence the company as a shareholder had been ineffective.
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"Unfortunately, no improvement has been seen and a decision has therefore been taken to divest the holding," Folksam said in a statement.
Folksam told AFP in an email that the market value of the holdings was about 1.6 billion kronor ($160 million).
The electric carmaker has been involved in a labour dispute with Swedish unions since 2023.
In late October of that year, the metal workers union IF Metall launched a strike against Tesla over its refusal to sign a collective wage agreement, and some 130 mechanics at 10 Tesla repair shops in seven cities walked off the job.
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IF Metall then extended the strike to include work on Teslas at other repair shops which served multiple brands.
The strike then grew into a larger conflict between Tesla and almost a dozen unions seeking to protect Sweden's labour model, including postal workers, dock workers and even spreading to neighbouring Nordic countries.
Negotiated sector by sector, collective agreements with unions are the basis of the Nordic labour market model.
Guaranteeing wages and working conditions, they cover almost 90 percent of all employees in Sweden and 80 percent in Denmark.
Tesla chief Elon Musk has long rejected calls to allow the company's employees worldwide to unionise.
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Musk's close cooperation with US President Donald Trump has also led to calls for boycotts against Tesla.
Acts of vandalism against charging stations and the brand's dealerships has increased, while several protests were held on Saturday outside retail locations in North America and Europe.
In Sweden, Tesla sales declined 63.9 percent in March and 55.2 percent in the first three months of the year, according to Mobility Sweden.
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