Product innovation and inspired public relations fueled Tesla’s rise to prominence, but the company’s supercharged PR stalled this year. Negative news about problems with its autopilot, financial challenges, production goals, quality-control problems and employee safety issues has shaken confidence in the electric vehicle maker. The company’s PR missteps, rather than mechanical or financial issues, caused much the unfavorable publicity.
Tesla CEO Elon Musk broke at least three basic PR rules of the road.
Ignoring Analysts’ Questions
Tesla’s most recent PR crash came during its earnings call with investors. Probably feeling mounting stress, Tesla CEO Elon Musk grew impatient with analysts’ questions about the company’s financial situation. “Boring, bonehead questions are not cool. Next?” he said. When analysts failed to ask questions more to his liking, he said: “These questions are so dry. They’re killing me.”
Tesla’s stock price promptly dropped. Musk later admitted refusing to answer questions was a mistake. While his remarks gained substantial media coverage, the crash of its Model X that killed the car’s driver last March and the ensuing squabble with the National Transportation Safety Board (NTSB) prompted greater PR damage, notes observes Matt Posky at The Truth about Cars.
Squabbling with Government Investigators
The NTSB said it put the brakes on a joint investigation of that accident because Tesla violated its agreement by disclosing information about the inquiry. NTSB Chairman Robert Sumwalt said Musk hung up on him when he complained that Musk had blamed the driver for the crash in his blog posts, Bloomberg reported. Tesla said it decided to leave the joint investigation on its own, an assertion which only drew unfavorable media attention.
Whether Tesla withdrew or was removed from the case, NTSB probably won’t share its findings with Tesla before releasing them to the public. “Musk’s only public relations tool will be his Twitter account,” says Forbes contributor Greg Gardner.
A Tesla driver died when his vehicle collided with a truck in 2016 while the autopilot was engaged. The NTSB faulted the driver for failing to keep his hands on the steering wheel, but later said Tesla bears partial blame for selling a system that allowed fatal misuse. The car’s manual warns drivers not to remove their hands from the wheel, but that’s not enough, Gardner says.
Tesla promotes the system as an autopilot and brags that it’s the leading technology on the market. Tesla fails to inform customers about the limitations of its autopilot system’s capabilities, an especially dangerous shortcoming for a high-powered product like an automobile. And its claim that its autopilot will eventually have full self-driving capabilities certainly doesn’t help.
Time to Repair Tesla’s PR
“Tesla has itself a PR problem and, like most things, it looks like it’ll be up to Elon to fix it,” Posky says. Musk deserves credit for building innovative products and maintaining shareholder confidence over past years. But the CEO must now steer Tesla’s PR back in the right direction to keep the company running. Tesla runs on public relations: It hasn’t turned a profit in its 15 year history. It needs to rebuild credibility to attract funds it needs to sustain production. If investors bail out over poor PR, Tesla won’t have the funds to turn the financial corner.
Bottom Line: Tesla’s normally outstanding PR efforts encountered a rocky road this year. While the company is known for its innovative products, PR is a major factor in its success. CEO Elon Musk needs to re-gain its PR traction in order to recharge investor confidence and win long-term success.
William J. Comcowich founded and served as CEO of CyberAlert LLC, the predecessor of Glean.info. He is currently serving as Interim CEO and member of the Board of Directors. Glean.info provides customized media monitoring, media measurement and analytics solutions across all types of traditional and social media.