Tesla Crisis Media Relations Case Study - Weebly

Tesla Crisis Media Relations Case Study

An Analysis of Tesla¡¯s Response to the Tesla Model S Fire Incident

Yuming Huang

A45612931

ADV860 Media Relations

Michigan State University

Table of Contents

I.

Company Background¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­.3

II.

Case Overview¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­.3

III.

Key Stakeholders¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­.3

IV. Communication Objectives & Key Messages¡­¡­¡­¡­¡­¡­¡­¡­.4

V.

Media Responses¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­.5

A. Positive Messages¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­...5

B. Negative Message¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­...6

VI. Implications¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­..7

VII. Appendices¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­...8

VIII. References¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­..10

I. Company Background

Tesla Motors Inc. is an American company, which was built by a group of Silicon Valley

engineers in 2003. They design, produce, and sell electric vehicles, and electric powertrains.

The first model that attracted widespread attention to Tesla was the unprecedented Tesla

Roadster in 2008. More than 2,300 were sold in four years in over 37 countries. The second

generation includes the Model S and the Model X. Both of them are high-end fully electric

luxury sedans. Tesla also produces electric powertrains to supply to other automakers, such as

Toyota and Daimler.

II. Case Overview

On October 1, 2013, after hitting metal debris on a highway in Kent, Washington, a Tesla Model

S caught fire. The driver hit something while driving on the High-occupancy vehicle lane of

Washington State Route 167. Since the onboard alert system reported a problem and required the

driver to stop the car, he exited the highway. The driver left the car without harm at the end of

the exit ramp before his car started to burn from the front of the vehicle. A witness recorded the

fire with his smart phone and posted this video on YouTube, which went viral immediately.

Firefighters, according to the incident report, tried to extinguish the fire with water, however the

battery was reignited under the vehicle. They eventually extinguished the fire by directly

applying the water to the burning battery. Tesla stock declined 6.24% and 4% in Nasdaq trading

respectively the following two days after news of this incident.

III. The Key Stakeholders

In order to reduce the damage caused by this incident, Tesla needed to appropriately

communicate with consumers, investors, and mass media.

Consumers

First, Tesla needed to appropriately communicate with the driver whose Tesla Model S was

burned in this incident. It had to be determined whether Tesla would replace his car or refund

him the money he paid for the vehicle. These were the driver¡¯s problems, as well as the mass

media¡¯s. In this situation, if Tesla were able to suitably satisfy the driver¡¯s needs and wants, then

it would have been more likely that the driver would have positively contributed to the damage

control through good word of mouth.

Moreover, owners and the potential consumers of Tesla cars are the key stakeholders. They were

eager to know the official and reliable information about the battery safety in Tesla¡¯s cars. If

Tesla failed to convince these people of the safety of the battery pack, the company might face

long-term negative public opinion, more consumer vehicle complaints, as well as a reduction in

sales.

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Investors

Tesla investors are also stakeholders who are eager to know the information about how

successful Tesla addressed this incident. This group is concerned about the financial

performance of Tesla. In this way, Tesla has the responsibility and obligation to inform investors

with necessary information that could influence the stock price of the company.

Mass media

Tesla needs to address mass media, as another key stakeholders. Mass media functions as a

bridge between the company and the general public. While news outlets monitor any potential

danger to the public, the public also needs media to obtain information. The image and

reputation of Tesla partly depended on the coverage of media. Specifically, Tesla needed to

provide sufficient, accurate, and timely information to mass media. This is important for the

news outlet to accurately report the incident to avoid false information shared with the public.

Moreover, instead of a passive response to the incident the company needs to actively direct

mass media¡¯s coverage of the incident.

IV. Communication Objectives & Key Messages

One day after the accident, Elizabeth Jarvis-Shean, Tesla¡¯s director of globe communications,

released a 62 word official response to the press (See Appendix A). Forbes criticized Tesla

stating Tesla ¡°should be doing more in the meantime¡± (Elliott, 2013). Three days after the

incident, Elon Musk, Chairman, Product Architect and CEO of Tesla, released a statement on

Tesla¡¯s official blog (See Appendix B & C). In this statement, he explained what happened and

what caused the fire in detail. Moreover, Musk compared the electric car with conventional

gas-powered car, and concluded that driving an electric car is safer.

The overall communication objective of Musk¡¯s statement was three-fold: spreading the truth to

stop the incorrect Tesla rumors, increasing media coverage to build company¡¯s image and

reputation, as well as building owners¡¯ and consumers¡¯ trust toward Tesla. In order to achieve

Tesla¡¯s communication objectives, Musk, in his blog, utilized several key messages.

Explain the accident as an extremely uncommon occurrence

A large metal object, which was a curved section that fell off the semi-trailer, caused the fire. It

went under the car and punctured the quarter inch armor plate with a peak force of 25 tons.

Through depicting this extremely unusual circumstance, Musk¡¯s blog clarified the accident was

not caused by the vehicle.

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Tesla appropriately designed to face extreme circumstance

The vehicle correctly and safely performed, as it was designed to, during the accident. The

onboard alert system instructed the driver to pull over and allowed him to escape from the

vehicle without injury. The internal firewall within the battery pack offered a solid barrier, which

effectively limited the fire only to the affected zone. The vent directed the flame toward the road,

instead of entering the passenger compartment.

Improper procedure

In order to directly apply water to the source of the fire, firefighters inappropriately punctured

the battery¡¯s protective plate. The newly created holes on the metal firewall allowed flames to

spread into the front trunk section. Nonetheless, the fire could be quickly extinguished.

Conventional gasoline car is more vulnerable

The result would be worse if a gasoline car faced the same circumstance on the highway. Since

the underbody of a gasoline car is only equipped with a thin protective metal sheet, the puncture

of the gas tank can cause gasoline to pool and burn the entire car.

Electric vehicles are safer than gasoline vehicles

Musk explained in his detailed blog post that ¡°the combustion energy of our battery pack is only

about 10% of the energy contained in a gasoline tank and is divided into 16 modules with

firewalls in between¡±. Moreover, Musk pointed out that statistics showed that drivers are ¡°five

times more likely to experience a fire in conventional gasoline car than a Tesla¡±. Hence, in terms

of fire risk, he claimed that electric cars are safer than conventional gas-powered cars.

Good communication earn the driver¡¯s support

In Musk¡¯s blog, he also posted the car owner¡¯s response (See Appendix C). In this email, the

driver said he understood the accident happened in an extreme circumstance. He claimed Tesla¡¯s

design and engineering worked well in this accident. Moreover, he appreciated the support from

Tesla, and looked forward to getting another Tesla car.

V. Media response

Musk¡¯s response was widely spread through news outlets. While a large portion of media

coverage quoted from Musk¡¯s blog in a positive way, there were also some negative media

responses that Tesla would not have liked.

A. Positive message

Prominent news outlets, such as Los Angeles Times, New York Times, The Wall Street Journal,

The Washington Post, and Time magazine, referred to Musk¡¯s argument that electric cars are

safer than conventional gas-powered cars. ¡°For consumers concerned about fire risk, there

should be absolutely zero doubt that it is safer to power a car with a battery than a large tank of

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