Tesla in Hot Water after Crash

A Crisis Communication Analysis Report

By:

Joseph Pledger

Danny Raffoul

Rikki Price

Dr. Robert Whitbred

Strategic Communication

4/6/2017
Introduction:
Crises can happen at any time and are largely anticipated, these events violate the
expectancies of both the public and company shareholders and require a rapid response to
contain or reduce the harm. In some cases, crises can lead to significant threats to life, property,
security, health, and/or psychological stability (Sellnow & Seegar, 2013). Crises may be caused
by many things, including oversights, accidents, natural disasters, or faulty decision making.
Sellnow and Seegar (2013) break these causes down into 3 categories, normal failure and
interactive complexity, failures in warnings, faulty risk perception and foresight, and breakdowns
in vigilance (pg. 8).
Normal failure is derived from normal accident theory in which normal routine failure
leads to crises that may be catastrophic. This tends to happen to large scale industrial or society
scale types of organizations. Sometimes crises involve interactivity in which one system or
subsystem impacts another (Sellnow & Seegar, 2013). Failures in warnings, faulty risk
perception and foresight types of crises are caused by failures to warn properly. Risk occurs prior
to crises, and crises as said to occur when risks are not properly maintained. Failures to perceive,
understand or appropriately communicate risks can cause crises that may have been avoided if
the risk were properly anticipated (Sellnow & Seegar, 2013). Finally, crises may occur due to
breakdowns in vigilance. This happens when conformity makes an organization vulnerable to
crises. When risks are not properly addressed or glazed over by an organization due to issues
such as group-think (Sellnow & Seegar, 2013). Group-think typically occurs when a small group
of people agree on a term because someone in the group has power or is influential in some
manner. The influential other persuades a group to think in a certain way and other group
members fall into line without disagreement. Regardless of causality, when a crisis occurs
organizations involved need to be quick to respond to the public because the public will have an
intense need for information. If answers are not given by the organization involved, then less
credible sources will provide answers that may not necessarily reflect well on the organization
involved (Sellnow & Seegar, 2013).
Crises communication functions are to monitor and maintain external relationships to an
organization. Crisis communication helps to build relationships with external stakeholders (i.e.
community and public) through the collection of viable information. An immediate response is
generally needed to manage a crisis and to reduce risk or harm. Response helps to reduce
uncertainty and disseminate crucial information. Crisis communication also occurs throughout
the resolution stage by providing defensive and explanatory messages as well as image
restoration and keeping dialogue open for an organization to learn from its mistakes. This paper
seeks to analyze a recent crisis that may have occurred due to both breakdowns in vigilance as
well as failures in warnings, faulty risk perception and foresight. As technology becomes more
important in our daily lives it is important to analyze organizations explanations for causes of
breakdowns in systems such as autopilot feature in Tesla automobiles. This paper will analyze
the response from Tesla after the deadly crash which occurred when one of their vehicles was
using the autopilot feature, and what they should have done in terms of response to a crisis
such as this.

Summary of Situation:
On May 7th, 2016 driver Joshua Brown (40) of Canton, Ohio was using the autopilot
feature of his Tesla vehicle. Reporters (Levin & Woolf, 2016) state that he may have been
watching the Harry Potter movie in his car rather than paying attention to the road. The Teslas
camera could not distinguish a large white 18-wheel truck crossing the highway from the
brightly lit sky, resulting in the self-driving car driving straight under the trailer at full speed. The
truck trailer hit the windshield and tore the top from the Tesla vehicle, which continued to drive a
quarter mile down the street before slamming into a telephone pole. When the firefighters arrived
on scene the driver was pronounced dead, the other driver, Frank Baressi (62) was uninjured.
Prior to usage of the autopilot mode drivers must acknowledge that use of the system still
requires a driver to keep their hands on the wheel always. Drivers are told they need to maintain
control and responsibility of the vehicles while using the system, and they must be prepared to
take over at any time (Lowy & Krisher, 2016). Whether nor not Joshua Brown was paying
attention is not the focus of this paper, the crisis stems from the fact that Tesla was immediately
notified of the crash via vehicle software. The company then reported the accident to the
National Highway Traffic Safety Administration (NHTSA) to investigate the self-driving
technologies role in the crash. Eleven days after the fatal crash, On May 18th, 2016, Tesla and
CEO Elon Musk sold more than $2 Billion of Tesla stock in a public offering at a price of $215
per share without releasing a word about the crash (Loomis, 2016).
The public was made aware of the autopilot crash on June 30th, 2016 when by an
announcement to the Tesla blog page. A letter titled A Tragic Loss informed the public about
the deadly crash but seemed more defensive about the technology than sincere condolences to
the family of Joshua Brown. The following sections will discuss the response from Tesla and
CEO Elon Musk and our evaluations of crisis management.

Tesla Response:
On May 18th 2016, not even two weeks after the death of Joshua Brown, The Wall Street
Journal sent out a news report that the organization sold two billion dollars worth of Tesla stock
(Ramsey & Stynes, 2016). Prior to the sales of stock, nothing yet had been said in regards to the
fatal crash. Reuters, a familiar news agency, mentioned on their website that Tesla didnt inform
authorities until May 16th and that the NHTSA themselves had also been sitting on this tragic
story, neither Tesla nor the NHTSA bothered of passing on the news to the world until June 30th
(Blanco, 2016). On June 30th, at 2:15 pm Elon Musk responded to questions on Twitter stating
that radar tunes out what looks like an overhead road sign to avoid false braking events, at
4:53pm he had tweeted a link to a letter from Tesla titled A Tragic Loss (Golson, 2016). One
of the first things mentioned in this letter was that they contacted the NHTSA immediately after
the crash and that they were performing a preliminary evaluation of the incident. Tesla then
brought up some issues trying to provide a better understanding on how semi-automation works,
appropriate ways it should be used, and that it was still in beta phase. The letter discussed how
the auto-pilot feature can be improved, but emphasized that the technology is incredibly better
than human drivers. Tesla went on for a bit boasting this feature, then finally, in a few sentences,
reflected on the death of Mr. Brown.
On the 4th of July, Carol Loomis, a journalist from Fortune magazine, tried reaching out
to someone to talk to from Tesla via email. She finally got a response from a public relations
executive who tried to down play the whole stock scenario stating that the crash news was not a
material fact. Soon after Elon Musk chimed in and immediately put up his guards feeling
attacked by the journalist who during that time may have slipped in a question about the price at
which the stock was sold. Loomis tried to explain that her emphasis was on the non-disclosure
of a material fact. Within minutes the conversation became heated and things escalated. Musk
then responded that what had happened was not material to the value of Tesla. He then
continued the feud on Twitter. The following statement may have been the tipping point of the
whole situation: Indeed, if anyone bothered to do the math (obviously, you did not) they would
realize that of the over 1M auto deaths per year worldwide, approximately half a million people
would have been saved if the Tesla autopilot was universally available. Please, take 5 mins and
do the bloody math before you write an article that misleads the public.
The very next day on July 5th, Sebastian Blanco from Autoblog (2016) wrote more
about this Tweet fest between Elon Musk and other editors like Alan Murray, an editor for
Fortune Magazine, that tweeted: seems pretty material to me. Shortly after, Musk fired back
saying: yes, it was material to you BS article increased your advertising revenue. Just wasnt
material to TSLA, as shown by market. In continuation to this quarrel, Sam Abuelsamid, a
writer for Forbes, also got involved and said: @elonmusk should check the math if he thinks
#Autopilot would save 500K lives/yr followed by a link to an article Sam wrote with
calculations debunking Musks theory and concluding that humans are better drivers than a car.
Musk reacted rapidly saying: @samabuelsamid wrong to exclude non-occupant deaths.
Autopilot would have prevented this cyclist from being killed! Linking a previous article
written by Autoblog (where Sam was employed prior to Forbes) that discussed how a cyclist
died at the hand of a human driver in a newly purchased Tesla. The car apparently had an
intense new-car smell, which the driver attempted to counter with a baking-soda scented air
freshener that caused him to fall asleep (Ramsey, 2014).

Evaluation of Tesla Response:

William Comcowich from Glean (2017) deemed Teslas response to the death as one of
the top four worst-handled PR crises of 2016. Not only did Telsa CEO Elon Musk have a delayed
response, but rather than responding with empathy he seemed to be defensive about his company
and the technology. Heisler (2016) called Musk brash but excuses Musk for his arrogance
because he is nothing if not outspoken. Heislers article defends Teslas brand and CEO Elon
Musk by stating that he felt he needed to defend the technology because if Musk sat on the
sidelines rather than responding to armchair pundits the media would have created its own
narrative, one that doesnt understand the importance of new technology such as self-driving
automobiles. Regardless, the self-driving technology is now being questioned by the public.
Blog author, and found of a strategic marketing consultant agency, Dom Burch (2016)
evaluates the response from Tesla, and states how situations such as the death of a consumer
using their product (self-driving tech) can make or break a brand reputation. Tesla chose to keep
quiet for a month, then act defensively, quoting facts about how many lives would be saved in
the future by autopilot cars (Burch, 2016). Instead of apologizing or addressing the situation,
Elon Musk defended the brand. Pointing out that Joshua Browns death was the first known
fatality in just over 130 million miles. He then retweeted how many people die a year in car
accidents and states that Browns death was a statistical inevitability (Woolf, 2016). Jonathan
Bernstein of Bernstein Crisis Management stated that everything about Musks response was
wrong, rather than responding with compassion he responded with anger and defensiveness. Sam
Singer, the president of crisis communication firm Singer Associates, states that the response had
been error filled from the beginning. Tesla has lost credibility due to how they managed this
crisis and the death of one of their customers. Tesla should have immediately issued a warning
rather than issuing a statement over a month later (Woolf, 2016). Not only was Teslas delay and
defensiveness off-putting to the trust of the public in the company, but it also affected overall
trust in self-driving technology and stalled development (DeBord, 2016). Not only did Tesla
delay a public statement, Tesla and CEO Elon Musk sold $2 Billion in stock shares prior to the
public announcement of the crash. Further exasperating the trust between consumers,
stakeholders, and the Tesla brand.
Burch (2016) cites Nick Agarwals ten-point guide to responding to crisis as a source
Elon Musk should have used when talking to the media about Joshua Browns death. This list
posits a few suggestions in the Seegar (2006) Best Practices in Crisis Communication
publication. Burch (2016) states that Musk should have addressed the public as soon as they
knew about the accident, on day one. He should have summarized the facts that he did know,
state his community partners who are helping to respond to the crisis, and give advice to Tesla
customers in response to the self-driving technology, assuring the public that Tesla is doing all
they can do to ensure the safety of their customers.

Recommendations to Tesla on how to respond:

It is never an easy task for a CEO or organization to undergo a crisis, since every crisis is
different and most likely has never occurred before. Coombs (1999) mentions that there are two
themes that should consistently emerge in crisis response, information and compassion. Tesla
chose to release information a bit too late, and the media portrayal had already begun damaging
the reputation of the organization. In terms of compassion, tweeting condolences during a Twitter
war was not the best way to empathize the death of one of their consumers. Gordon (2016),
quotes Tadd Schwartz, president and CEO of Schwartz Media Strategies, saying that Musk
should have responded to the accident with empathy and transparency, if not remorse and
never should have dodged interviews in favor of waging war with the media. When the
integrity of Teslas self-driving technology was questioned, CEO Elon Musk responded that
more people will be killed if the technology is not adopted (McGoogan, 2016). Musk said that
not disclosing the crash and investigation was not material to the company although keeping
this information hidden financially benefited Tesla after marketing its auto-pilot technology as
safe and important to its customers (Blanco, 2016).
Downing (2007) remarks that during a crisis the first responsibility of an organization is
to tell stakeholders what steps people need to take to ensure their safety and ensure the public
that the company is taking the proper steps to get the crisis under control. As mentioned earlier,
Coombs (1999) states that instructing information, the term used to describe the information
needed by stakeholders, has three variants: (a) the what, why, when, where and how of a crisis;
(b) any precautionary actions stakeholders need to take (e.g., stress the importance of using
autopilot technology wisely, advising drivers to keep their eyes on the road and hands on the
wheel and basically providing direction on steps to take to stay safe); and (c) actions taken to
correct the problem (e.g., What has been done to end the crisis and prevent a repeat such as
uninstalling the self-driving technology from Tesla vehicles while the investigation was
pending).
Some of the crisis communication best practices (Seegar, 2006) should have been
employed to help Tesla maintain credibility. Primarily they should have foreseen an accident
coming and planned for how to respond. Telsas CEO Elon Musk comes off as cocky and
overconfident of his technology and it shows because they didnt have a contingency plan in
place. Pre-event planning is crucial when developing and beta-testing new technology on the
public. Seegar (2006) indicates that pre-event planning consists of: Identifying risk areas and
corresponding risk reduction, pre-setting initial crisis responses so that decision making during a
crisis is more efficient, and identifying necessary response resources (p.237). In the pre-event
planning stage, if Tesla even considered the chance of a fatal accident due to reduction in human
attention they could have revised the name of the auto-pilot system to driver-assist function
(Lay, 2016). This would showcase the technology while persisting that drivers need to pay
attention to the road.
Tesla CEO Elon Musk responded defensively and rather than listening to the publics
concerns and maintaining a relationship with the media he destroyed every shred of credibility
by responding with anger. Additionally, the selling of stock shares before letting the public know
about the accident didnt look so great either. He should have announced the crash immediately,
let the public know he was working with the NHTSA to find out what happened, and tell Tesla
owners to drive carefully or delay using the autopilot system until they knew more about the
accident.
Conclusion
There is no question about how distinctive every crisis is and how each of them unravel
into unexpected ways that we cannot predict. A great way to tackle a misfortune like this is to
have a set planned crisis procedure. This procedure, if pre-planned, will be useless if its not
followed up with listening to public concerns, being sincere, and meeting the needs of the media,
who play an important role in scenarios like these. Elon Musk is a brilliant innovator who (in his
mind) is literally trying to save the world on his own and sometimes gets too caught up with or
passionate about what he does, moreover, he forgets at the end of the day its all for the benefit of
humans. Compassionate feedback to news reporters, government officials and the public is
always beneficial to enhance an organizations reputation and credibility. As the spokesperson for
Tesla he must learn to show concern and empathy and not behave like the robots we build today.
According to Bruce Hennes, the best way to manage a crisis is to:
1. Tell the truth.
2. Tell it first.
3. Tell it all.
4. Tell it fast.
Elon Musk waited until after Tesla shares were sold to publicly acknowledge that there was a
crash resulting in the death of Josh Brown. He should have followed the 3 Fs:
Fudge up
Fess up
Fix up.
CEO Elon Musk didnt admit fault, he sought to distance himself from the tragedy by comparing
Telsa to the Otis Elevator Company. Musk said: If you view autonomous cars like an elevator
in a building, does Otis take responsibility for all elevators around the world? No, it doesnt.
(McGoogan, 2016). Sometimes an organization needs to take responsibility for an accident,
respond with empathy, and apologize. Bruce Hennes suggestions align very closely with
Seegars (2006) best practices of crisis communication. Perhaps Tesla CEO Elon Musk could
benefit by utilizing media training, giving up his Twitter page, and planning for risk to ensure the
reputation of the Tesla brand remain untarnished for future crisis management situations.
 References

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Links to YouTube Videos in the PowerPoint Presentation:

https://www.youtube.com/watch?v=EJmhpgW0Dmc
https://www.youtube.com/watch?v=gqsmhKQEn2c
https://www.youtube.com/watch?v=07J0c6KXuSg
https://www.youtube.com/watch?v=qnZHRupjl5E