This Company Provides a Crisis Management Lesson for Electric Vehicle Makers

Leading U.S. automakers have made a sharp pivot into the electric vehicle field in recent years, but in terms of crisis management the focus on zero emissions is not a free pass for bad behavior. A new lawsuit against Tesla Motor Company indicates that a lack of attention to racism and workforce issues can ripple back on brand reputation, regardless of what comes out of the tailpipe.

The case against Tesla

The Tesla lawsuit was widely reported last week, when the California Department of Fair Employment and Housing followed up on a three-year investigation of a Tesla factory in Fremont by filing a civil action against the electric vehicle maker this month. The agency also issued a press release on the matter.

"After receiving hundreds of complaints from workers and a nearly three-year investigation, DFEH found evidence that Tesla operates a racially segregated workplace where Black workers are subjected to racial slurs and discriminated against in job assignments, discipline, pay, and promotion,” DFEH Director Kevin Kish charged in a public statement.

DFEH also alleges that Tesla ignored those who tried to call the company’s attention to the situation.

“In addition to race-based segregation in the terms and conditions of employment, DFEH alleges that Tesla has turned a blind eye to years of complaints from Black workers protesting the near-constant use of racial slurs in the workplace and the presence of racist writing and graffiti in common areas of the workplace, including swastikas and other hate symbols,” DFEH wrote.

Crisis management 101: Fail

National Public Radio was among the many news organizations noting a history of complaints at the Fremont factory dating back practically to the start of operations in 2012, and listing some of the allegations in horrific detail.

“California's Department of Fair Employment and Housing (DFEH) said it attempted to resolve the dispute without litigation at first, which would involve an internal dispute resolution provided by the department, free of charge,” NPR reported, but Tesla reportedly refused to attend a meeting offered last month.

Tesla responded to the filing of the lawsuit by posting a public message on the company blog, on February 9. In terms of crisis management, the strategy underlying the post seems rather odd. Tesla could have simply disputed the allegations in the lawsuit while pledging to take the matter seriously. Instead, the post is a litany of deflection, misdirection and misplaced victimhood.

Who is the audience?

The strategy behind the blog post is actually not such a mystery. It is not a signal meant to calm Tesla investors and other financial stakeholders. It is a message to Tesla fans, a set of talking points to be chatted up on social media regardless of whether or not they are relevant to the case, or factual at all.

For example, at the beginning of the post Tesla describes itself as “the last remaining automobile manufacturer in California,” implying that its unique status should provide it with special consideration. That is clearly irrelevant to the charges filed by DFEH.

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Tesla also emphasizes that the Fremont electric vehicle factory “has a majority-minority workforce.” That may be so, but the company provides no indication of whether or not minorities have had equal representation, let alone majority representation, as executives, managers, or supervisors at the time of the allegations.

Similarly, Tesla raises the point that it “provides the best paying jobs in the automotive industry to over 30,000 Californians.” Tesla does not specify whether or not “best paying” applies to jobs on the factory floor where the alleged behavior took place, or to managerial positions at the factory, or to other high paying positions at its headquarters and other offices.

Tesla raises the job creation angle a second time, arguing that DFEH should be working with the company instead of suing it, “especially because the allegations focus on events from years ago.”

That line of argument may make sense to Tesla fans, who are willing to make any excuse for their favorite car. However, time does not erase crime. The appeal to a timeline is just another non sequitur, unless Tesla also shows that the statute of limitations has run out on the charges.

Hyperbole on decarbonization

The blog post reaches for pure hyperbole when it references Tesla’s impact on decarbonization.

“No company has done more for sustainability or the creation of clean energy jobs than Tesla,” the company states. However, any mass transit company or bicycle manufacturer can arguably do “more for sustainability” than any manufacturer of high-end passenger cars, zero-emission or not.

The reference to clean energy jobs is even less convincing, considering the activity in the U.S. wind and solar industries generated by the Renewable Energy Buyers Association and other corporate-led clean power associations.

If the clean energy argument is a reference to Tesla’s acquisition of the residential solar installer SolarCity in 2016, it still doesn’t hold up under scrutiny. The biggest solar installer in the U.S. is Sunrun.

Doing good is not a free pass

After laying out this list of talking points, the blog post does get around to addressing the lawsuit itself. The gist of its argument is that previous investigations by DFEH that have not resulted in charges of misconduct. However, that is a somewhat disingenuous take. Tesla refers to “almost 50” DFEH investigations that closed in recent years without a finding of misconduct. If the number was 500 it would still be irrelevant to the allegations in this particular lawsuit.

The blog concludes by circling around to the main talking point, which is the idea that a company that has “done so much good for California” should not be targeted for prosecution.

It is true that big companies like Tesla often leverage their economic clout for favorable outcomes in court. Still, job creation is not a magic shield to offset crimes. Tesla can easily win hearts and minds among its fan base but convincing a court of law is going to take some work.

New options for electric vehicle buyers

Tesla will also face an additional challenge as the lawsuit unspools. Until now, other leading U.S. automakers have failed to challenge Tesla in the electric vehicle space. In 2016 General Motors tried with the all-electric Bolt, but car buyers did not latch on to the unfamiliar name – or other models – in any great numbers.

That started to change two years ago, when Ford achieved an instant hit with an electric version of its iconic Mustang brand, followed by an all-electric version of its popular F-150 pickup truck. In the coming years, electric car buyers can pick and choose among some of the best-known names in U.S. automotive history for zero-emission mobility.

Getting serious about crisis management

Virtually all large companies generate controversy over labor issues at some point. Tesla still has plenty of time to address new competition in the electric vehicle field and appeal to car buyers outside of its comfort zone, which currently skews white, male and Republican.

However, it is going to take real effort, not just a set of talking points, for Tesla to retain its status as the top electric vehicle maker in the U.S in the coming years. The Fremont plant has been a sore point for labor advocates, and Tesla’s anti-union stance puts the company at a disadvantage in an era when younger workers are rediscovering the power of unionization.

To make matters worse, the media spotlight continues to focus attention on the tax avoidance habits of Tesla CEO Elon Musk. His social media habits are also not helping. Musk routinely mocks President Biden on Twitter, and he recently praised the ongoing right wing extremist protests that have erupted in Ottawa and elsewhere in Canada.

If Tesla is serious about damage control, the company could start by dropping the attempt to paint itself as a do-gooder, and stop undermining the commander-in-chief as the nation faces the prospect of all-out war in Europe along with the threat of violent right wing extremism at home.

Image credit: Martin Geiger via Unsplash