We are tantalizingly close to our first fully electric vehicle as our 2011 workhorse of a Prius is reaching the end of its life. This car will primarily be driven by Mr. Stevens so I asked if he was looking at the Tesla Model 3. The answer was no. “I have no interest in supporting Elon Musk. Too crazy these days.” If Tesla, arguably the best electric vehicle manufacturer in the world, is losing a potential customer like Mr. Stevens, a level-headed, financially minded manufacturing executive who is not even on social media, over their CEO’s values, then Tesla’s issues may be serious.
As someone who loves what Tesla has done to catalyze the adoption of electric vehicles - and solar - on this planet, this makes me very sad. I fondly remember visiting the offices in 2012 and being blown away by how much more of a tech company Tesla was than a car company. Several years later, their head of sustainability gave me a tour of the Fremont plant and it was a marvel of efficiency with zero waste, incredible robots, and stellar branding. I’ve always assumed our first electric vehicle would be a Tesla once the “cheaper” version was out. For a number of years, Musk was the living person I most wanted to have lunch with. Yes, he was clearly eccentric and difficult. The self-disclosure that he’s on the spectrum is no surprise and based on my experience around tech founders, it’s relatively common. Perhaps it is one of the very reasons he is so successful. And certainly Tesla has had Elon behavior challenges before.
In 2018, a flurry of Musk tweets landed them in hot water with the SEC and both he and Tesla paid a $20M fine. A plethora of articles then questioned whether Musk’s fame was still good for the brand - citing a range of issues from cash on hand to Model 3 production issues to his odd dress at the Met Gala. Betting against Team Tesla back then would have been a bad bet. The Tesla 3 was the first electric car to surpass 1 million in sales. At its peak in 2021, Tesla stock had gone up 1,600%. Even after this market meltdown, the stock is still up 936%.
However, I do think the issues this time may be more profound. Elon built a brand that was, at its core, this mix of technology innovation, luxury and making the world a better place. As a result, Tesla’s initial buyers were West coast digerati, environmentalists or wealthier middle aged men from mostly coastal states. With the Model 3, they attracted a new younger buyer but still primarily from more progressive places like California and Washington (although global sales likely surpass US sales now). In the US, it is a brand that symbolizes progress, purpose and impact.
Unfortunately, Elon’s current set of rants and behaviors attack those very values. He’s been accused of sexual harassment and made sexist tweets. He called people dumb for worrying about the Coronavirus and then violated public health orders. More substantively, Tesla had to pay $137M to an employee who said they ignored complaints including using the N-word and having swastikas written on bathroom stalls. This week, after a tweet about “woke mind viruses”, Tesla layoffs included several people who led, as volunteers, diversity groups at the company. The concerns have become so significant that last week SpaceX employees published an open letter to company executives denouncing his behavior. “As our CEO and most prominent spokesperson, Elon is seen as the face of SpaceX — every Tweet that Elon sends is a de facto public statement by the company. It is critical to make clear to our teams and to our potential talent pool that his messaging does not reflect our work, our mission, or our values.”
The impact of his behavior on attracting and keeping talent will certainly be highly connected with the long term success of both companies. However, as a consumer brand, Tesla may suffer also from the disconnect between the values of their celebrity CEO and what the brand allegedly stands for, especially with the up and coming Millennial buyer. Research shows that 83% of millennials prefer buying from brands, and leaders, that align with their values, which orient heavily towards purpose and impact. There are now a number of electric vehicle choices. If the Millennials, and men like Mr. Stevens, vote with their values, Tesla may be in for a rough ride.
Quote of the Week: If people believe they share values with a company they will stay loyal to the brand.