Unpacking Elon Musk and Tesla's Current PR Problem

Matt Posky
by Matt Posky

It would be unfair to criticize Tesla Motors’ CEO without also illustrating just how important he is to the company. Were it not for Elon Musk, Tesla would have never made it this far. He was not only integral in its foundation but also the driving factor as it picked up investors. While the company was building innovative products, he has kept shareholders looking toward the horizon and keeping the faith.

Unfortunately, 2018 hasn’t been a great year for Musk. While the brand has managed to keep its exceptionally loyal fan base, bad publicity has shaken investor confidence. No automaker is free from ugly stories but Tesla has been deemed semi-miraculous for some time — making any failures that much more glaring. The bar has been set unreasonably high and unkept promises have caused issues. Tesla has itself a PR problem and, like most things, it looks like it’ll be up to Elon to fix it. But it’s going to be a monumental task, Musk is already putting out fires everywhere and the pressure is only expected to build over the next 24 months.

In addition to bringing up Model 3 production to 5,000 units per week by June, the company has said it intends to bring the Model Y crossover to market by 2020. The Model 3 has already been faced with numerous production hangups and had serious trouble reaching assembly goals by the dates previously promised. Musk has even begun sleeping at the factory to do whatever it takes to bolster production and prove his commitment.

However, office camping won’t be enough to ensure the Model Y will be ready to go in two years. Musk recently said that Tesla would be announcing a brand-new factory location before the end of 2018, which will eventually become the electric crossover’s industrial womb. But factories take a long time to build. Even a modestly sized factory can take over two years to complete once the ground is broken — and that’s assuming everything goes according to plan.

Then, and only then, can the automaker start prepping the facility for Model Y production. Meanwhile, it still has to plot what it’s going to do about manufacturing the new roadster and semi-truck.

Analysts and investors are starting to realize this is an immense amount for the company to achieve, perhaps too much. During last week’s earnings call with investors, Musk seemed to be fed up with analysts hoping to make sense of Tesla’s precarious financial situation. During a question about where the company stands in terms of capital requirements, he refused to answer.

“Excuse me. Next. Next,” Musk told the call operator. “Boring, bonehead questions are not cool. Next?”

But even more mundane questions, like what percentage of Tesla 3 reservation holders have started to configure options for their cars, were met with disdain. “These questions are so dry. They’re killing me,” he said.

But these are the kind of questions analysts need to know so they can make projections about the company’s profitability. If the answer isn’t one Musk wants to give, the brush off probably isn’t a great way to appease worried investors. Share prices even took a modest hit after the earnings call. But Tesla stock has been relatively flat since recovering from the real damage dealt in the wake of a high-profile Model X crash in California from last March.

Although, that has garnered continued bad publicity as well. The National Transportation Safety Board, which has been tasked with investigating the role Autopilot played in the incident, has been at odds with automaker since it released its take on the accident to the public. The NTSB even scrapped a joint investigation because it felt Tesla wasn’t adhering to agreed-upon rules. The investigative agency said the automaker was strictly prohibited from disclosing any details of the investigation and had violated that agreement.

According to Bloomberg, Robert Sumwalt, chairman of the NTSB, called Musk on April 11th to tell him that a blog post by his company casting blame on the driver of a Model X for a fatal crash is in breach of their arrangement. He then said he would be forced to remove Tesla from participating in the investigation. “Best I remember, he hung up on us,” Sumwalt told attendees of the International Society of Air Safety Investigators’ Mid-Atlantic Regional Chapter last week.

This doesn’t mesh with Tesla’s claims that it had removed itself from the investigation prior to the NTSB’s announcement and drew further criticism the company didn’t need. Most of the news surrounding Tesla during the last few months has been uncharacteristically negative. While some of it has been valid, like quality control issues, employee safety concerns, unmet production goals, and worries about the company’s long-term finances, other bits have been rather petty — driven by the company’s constant need for attention and the press’ symbiotic fascination with the automaker.

For example, Musk took quite a bit of heat over an April Fools’ prank that joked about bankruptcy. It didn’t go over well with the media and was, admittedly, poorly timed. But it seemed rather benign compared to the myriad of more-tangible issues the automaker was being faced with. Some of the staff here even found it to be darkly comical.

Tesla’s status as an industry outlier and its CEO’s high-profile nature really makes all of this exceedingly difficult. The firm is held up largely by people’s faith in it. Investors need to continue believing in it to exist, especially considering Musk has given it this company-of-tomorrow framework but it hasn’t turned an annual profit in its 15-year history. Bad publicity could really hurt Tesla’s future and it has had too much lately. If investors begin pulling out, it won’t have the funds necessary to build these new models and finally make some money.

That doesn’t mean the company’s about to throw itself against a wall. But it does mean it has to be careful to not let things fall apart now. It may have already made amazing strides but it’s still technically an automaker in its infancy. Tesla is, no doubt, hoping the public will understand growing pains are part of the evolutionary process as it hunts for production volume. Meanwhile, Elon Musk has recanted upon his behavior during the earnings conference. We don’t expect him to take it easy on those who are critical of the company’s prospects but it’s good to see him trying to right the public-relations ship and acting a little less stressed out. Because he’s going to need to remain confident and keep a level head if he’s going to get through the next couple of years.

True. And once they were on the call, I should have answered their questions live. It was foolish of me to ignore them.

— Elon Musk (@elonmusk) May 4, 2018

[Images: Tesla Motors; Elon Musk]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Dingleberrypiez_Returns Dingleberrypiez_Returns on May 08, 2018

    TTAC sure seems to like the term “unpacking” these days. Try a thesaurus, guys.

  • Indi500fan Indi500fan on May 08, 2018

    This is the first I've read about a new Tesla production plant. Is there a current nationwide scramble (a la Amazon) on the part of politicians to throw money at Musk that I've totally missed?

    • Civicjohn Civicjohn on May 08, 2018

      indi500fan, There hasn't been any announcement, EM said that they would probably announce something at the end of 2018, but from what I've read, it takes about 2 years to bring a plant on line. He said they were maxed out at the Fremont site, there's no room at the GigaFactory unless they expand the building (I believe Panasonic actually occupies more space there than Tesla), and he has in past statements said that most likely any GFs would have a production line along with it. China makes the most sense, but not knowing where the US/ China trade talks evolve, they would face a 25% tariff for bringing in cars built somewhere else. EM was very dismissive during the conference call, many analysts called it the most bizarre call they had heard in years (just Google it). He basically implied that the Semi wasn't a big deal, he had to get clarification from other Tesla staff on the call to say they had about 2000 orders in house. Roadster was not even mentioned, Model Y (the CUV) has flipped 3 times but now their thinking is that they will NOT use the chassis of the Model 3 for that product. While that sounds whack to me, I'm no rocket scientist. I'm assuming the Model Y unveil will happen sometime this year, but the deposit amount will likely be higher than the $1k for the Model 3, and they may have Model 3 reservation holders that will jump ship and move to the Model Y. And like it or not, the Kona and the Jaguar iPace will be shipping by the end of 2020. So it is starting to pile up, the different models, the lack of production lines, and the competition (beyond the Chevy Bolt). That's why I mentioned earlier that he should step aside from the role of CEO and put someone else in that position.

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