Tesla

Welcome back to Communication Breakdown, a new podcast from the Observatory on Corporate Reputation. Thanks for joining us. I'm Steve Dowling in Silicon Valley. I'm Craig Carroll in New York City. Each week, Steve and I take a look at strategies companies are using to shape headlines and sometimes save their skins. It's a post-game show for PR Pros. This week, personal politics takes a toll on Tesla sales and shareholders. That could the magnificent seven shrink to six?

Tesla's market cap dipped below $1 trillion this week, with shares down some 35% from their peak in December. Most of that precipitous drop has been since inauguration day when Trump took office alongside his top donor, Tesla CEO Elon Musk. And while Tesla has seen recalls, weak financials and slowing sales growth, Elon's extra curricular activities are increasingly getting the blame.

In the European analyst's old Bloomberg this week, quote, Tesla's biggest challenge in 2025 is in technology its perception. After discussing it briefly in last week's episode, we decided the impact on Tesla's reputation is worth a closer look. And maybe there are some learnings for the rest of us. The numbers from Europe are stark. In Germany, Musk threw his support behind the right wing AFD party in last week's elections. Tesla sales there were down 60% in January.

In the UK, Elon's been attacking the new labor government and endorsing the populist reform UK party. Tesla sales there are down 8% and recent polling shows 71% of Britain's have an unfavorable view of Musk. Earlier this week of video in London went viral, trolling him with a bus shelter ad for a fictional, Tesla branded swastikar with Elon giving a Nazi salute. The caption goes from 0 to 1939 in three seconds.

And here in the United States, buyers for more has been a recurring theme among Tesla owners going back at least two years. And that's when a Bloomberg survey of Tesla owners found that their opinion of Elon had dropped from almost 4.5 on a five point scale to just under three. We don't have recent sales data for the US, but as we mentioned a moment ago, the stock is in the slump and multiple analysts are saying that Musk's political activities are a factor. Steve, what to do here?

How should Tesla be responding? Where does Tesla go from here? Well, the stock is down pretty hard, so it's a company problem. The question is, can they do something? Should they do something? And I think the thing that you would do in this situation is put some distance between these policies, this posture of the CEO and what the company actually does and how it actually makes money. The question then, can they, the answer is probably no. I mean, look at the factors.

The board has been criticized for years as too cozy, too much of an enabler for Elon. I think if they could do something, I would think you would start with advertising, reiterate what the company does well, that it stands for something other than politics. But Tesla doesn't advertise very much. They have no agency of record. Their advertising spend is tiny, mostly online. So it's not like they can do a, quickly do a big TV ad.

And the third thing, which is probably most relevant to our podcast is they famously have no comms team. There are just no levers to pull. Elon does not believe in PR other than his own outbursts on Twitter, which are, which are Legion. But for all practical purposes, can they distance themselves from him? I don't think so. First of all, there's so much there, right? I mean, there's the question of, should there be a distancing between Musk? That's one thing.

I think dealing with the board's response is another factor. And the fact that you mentioned, they don't even have a comms team. And I think, lastly, whether or not advertising plays any role here, let's start with the first one of whether or not they should be distancing themselves from Musk, whether they can or if they should. All things being equal, if you're just looking at this, let's say from a shareholder perspective, or maybe an employee perspective.

You're just looking at it as the work itself, the development and production of cars to sell. Yes, you would want to eliminate this major distraction, not eliminate, eliminate, but you would, you would like to be not as closely associated with it. But I don't think that it is possible because of the way the company runs, the way it has been set up. It is, I think, in the short term, inseparable from the CEO. So I think for the people inside of Tesla, the question is, what do we do about that?

And unfortunately, one of the options they have are kind of like, well, you deal with it and you run through it. So I think that the normal rules just don't apply here. And on the one hand, I think that is probably how it has been set up because that has worked so far. And for all the criticism he is coming under, deservedly so, he is an ambitious executive who has pushed this company to the forefront of electric vehicles. I think for a while, certainly, they were synonymous with electric cars.

But that close association, there is a downside to it now, a very clear downside, I think, as analysts are identifying. And it is not clear what the company can do about it. Part of the issue here is that there is no traditional levers for them to pull. Tesla doesn't have a communication scene. We've established that. It just has one guy doing the job and that guy is Elon Musk himself.

Most companies will have a pure person to shape the message, but here, there are CEOs, the one who is the message. It's not like they forgot to hire a pair of professionals. They just made a strategic decision not to have them. No, they consciously. I mean, Elon is famous for making that move at Tesla and at Twitter, it was to just phase out or in Twitter's case, just straight up acts them because he just sort of felt they weren't needed.

And I wonder about whether that was not that the communications function was not needed, but that someone to tell him to do things differently or that maybe the way he was going about it wasn't the best was what he was really looking to eliminate. Yeah, and but also from a media perspective. I don't think he has any trouble generating media attention himself. And I think that's part of the reason another issue, right, that he doesn't have anyone in communications.

But they could benefit from is better alignment between what it says, what it does and what other people are experiencing right now. The thing is you have to look at the magnitude of each of those factors like if Tesla had a runaway popular product that every owner loved and you had a CEO who did some crazy things on the side, you would think that that would be manageable the way you describe it.

Instead, I think you have Tesla, which has a product that is popular in some circles and they had an early lead, but now there are tons and tons of new entrants. They have they have a lot more competition than they did even three years ago. And especially as we look at Europe, there are Chinese manufacturers who are coming to market with some really strong competitors.

So I'm not an expert in automotive area though we've done a lot of shows about cars, which is fun, but they face real competition. So they're not the only game in town. And I think more importantly, the outsize profile of their CEO is just getting so much more attention than anything they're doing on the product side. It is really, here's a guy who makes cars and look at all the things that he's doing.

And especially in Europe, the activity is very disruptive on the election side and he's very vocal in the UK. So I think that it's just that the balance is completely out of whack for Tesla. And it's real because it's showing up in sales certainly on the continent. Seems to be happening in the UK. It's amplified by the fact that they're losing market share because of the new entrants. Well, okay.

There's actually a couple of things there that I want to hit on because I know that is significant impact on their sales, right? You know, losing 50% of sales in a key market, that's huge. But when you consider the fact that they only had 1% of the market, I don't know. It just seems like from a media perspective, if that part is not in there, I mean, obviously it loses its newsworthiness there, but it is part of the story.

Well, it's the part of the story I think when it comes to the stock and to the company and to the shareholders. So if we look at the story of Elon, I think maybe it's a smaller part of the story, but if we look at the story of Tesla, this has got to be a four alarm fire. And no, it is. So I don't want to discount that. But the fact that they only have 1% of the European market number one. Number two, they haven't even introduced a car there since 2021, right?

So it's been four years without a new car. I would have to ask, you know, is this is this all about perception? Are there some additional business factors here as well that affect the sales? I mean, I know I'm not going to go out and buy an electric vehicle that's already four years out of date. Well, I mean, first off, I think the electric vehicles, especially Tesla, I would argue, are a little different in that equation because the software updates are much more frequent.

But half of 1% seem like not much in the scale of the market. But half of what they were selling is that's a big. That's a big problem. And also, I think it would be different if you were looking at a, like, a long gentle decline of a company that weren't introducing a lot of new things.

This looks like sales are falling off a cliff. And of course, this is by analysts are looking going, what's changed? Oh, well, Elon's being very vocal in Germany and in the UK and in the US politically. And that's why they're reaching that conclusion. I think it's hard to argue with. The reality is Tesla is going to be putting some space between itself and Musk, but in practice, that's impossible. There's no corporate firewall here. He's not just the CEO.

He's the product, the marketing, the comms, the crisis response, all rolled into one. And the board is not exactly an independent check on its power, the more like a cheering section. It seems to be a really tough spot. And without the significant change internally, I don't know how they change perceptions, except if this episode with Elon sort of fades and it was just a phase. You can go back to make cars, but I don't think anybody thinks that's likely to happen anytime soon.

What would you say CCO should do when you've got a CEO that is helping on some type of destructive decision, right? I mean, there's a talk in democratic politics right now of letting things get bad. Is that a viable strategy here? Well, and it's a viable strategy for an opponent. I don't necessarily think that I agree with it for the Democrats. That's a subject for a different podcast. But I think that's you're looking at it from an insider point of view.

If you're on the team, what do you do if someone's making a difficult decision and let's be clear, this Elon Musk and Tesla scenario is an extreme, extreme example. But what do you do when you see something going the wrong way? You have to do something is the first thing. Like you have to do something. And the most important thing to do is bring it to them, bring it to the boss or bring it to the decision maker. It's your job in communications.

I mean, your job is to give them your best advice, even if it's about them. And I think for our comms leaders, as they all know, a key skill is delivering bad news and generally telling people that they don't want to hear. I mean, you don't need to be mean about it. But here's what's wrong with that interview. For example, here's where we took a wrong turn and here's how I think we can get out of it. And sometimes the PR person is the only one with that position.

And sometimes the only one with the guts to do it. But you have to do something is the first thing. It's clear, right? Your job is to make things palatable. Your job is to get it away and make sure that as the last line of defense between an impulse move and lasting reputational damage, right? It's not about PR. It's about protecting the long term viability of the business. But here's where it gets complicated.

If you built trust with your CEO, you can speak up, you can challenge them and sometimes change the course. But if you haven't and your voice gets sideline, you're just shouting at a devoid and that's where the real test of a CCO comes in. Because if your CEO is helping on self-destruction, you have to ask, are you here to fix things or are you just here to clean up the mess afterwards? You're right. That's some reputation management of your own as a CCO that you have to do.

You ultimately, they're the CEO. You can't stop them. You need to give them your best advice and you need to make sure they know that you're not just crying wolf. And the best way to do that is make sure you're not sounding the alarm too often. You have to keep things in perspective. That's a big part of the job. You put yourself in the customer's shoes. You understand the press point of view. You get ahead of the problems and hopefully you can identify them before someone makes a misstep.

And at the end of the day, I think the things get really bad. You need to know where your CEO lives in case you need to lie down in their driveway. You need to communicate to them. This is going to be really bad. And how can I convince you of that? But you can't quit. You can't threaten to quit. You can't run that play very often. So yes, to your point, you need to build that reputation.

You need to build that relationship within the organization so that people understand this person is not crying wolf. If they say it's going to be bad, it's probably going to be bad and are we ready? Yeah, I know it's a joke about you need to know where they live to lie down in their driveway. But also it's not. The best CCOs understand that sometimes their job is to throw themselves in front of a bad decision. But the real skill isn't just stopping you from making a bad mistake.

It's making them think it was their idea to abort it in the first place. You don't win these battles by saying don't do this. You win by reframing the problem in a way that aligns with their goals. You've got to give them a better hill to die on. One that doesn't take the company down with them. Yeah, and you've got to make sure that you're at all times you're part of a team, right? It's, you know, I know we're headed towards this decision, but I think it could be a really bad one.

And the other part of that is let me show you a path out. The other thing that can be effective is if we do this, here's the problem we're going to face. And then this is the position we're going to be in. Like here's the explaining we're going to need to do to this audience. Or here's what we might have to make up for. And that here's what that might look like.

Yeah. So look James Carvell is the one I was thinking of in terms of the response here on whether Democrats should just let the administration have all the rope that they need to hang themselves. That's the issue. But not stop fighting things. Just let it play out. You know, have we exhausted that? How does that? Any situation where you let that happen with your CEO? I don't believe so. I mean, I don't believe in the let it happen strategy. It might work for Democrats.

It doesn't work for a corporate leader. I don't think. I mean, at some point you have to let it happen because you don't have a veto. The boss is the boss disagree and commit, but you can disagree or make the counter point right up until you have to commit right up until the decision is made. Yeah. The best thing I think you can do is be setting expectations for what the reaction will be. It's easy to succumb to second guessing on that. Maybe it won't be so bad. Maybe he's right.

Sometimes, sometimes the person with the idea you think is really bad is right. It can be lonely being the dissenter in these situations and you don't want to be Debbie down or all the time. Right. Over time, over a relationship, a career of accurate calls, ideally people listen when you raise a note of caution. Look, if you can't deliver bad news, you really shouldn't be a CC on the first place. You know, your value isn't like telling leadership what they want to hear.

It's about being able to give them the truth before the market does because if you wait too long for the backlash starts, you're not leading, you're reacting like everyone else. So delivering bad news isn't just about saying this is a terrible idea. You've got to be able to show consequences before they happen. What will investors do? How will employees react? What's the media angle?

What a great CCO's got to be able to anticipate the backlash before it happens and present solutions before too late? As you keep bringing up James Carve, let me just give you my two cents on the let it break philosophy. Yeah. I think that the weird thing about that is that it's kind of playing the Elon Musk, the Doge game. The approach seems to be like, you know, the Elon, we're going to dial everything way back.

We're going to slash, you know, budgets and headcount, whatever way back and see what breaks or see what, you know, what the impact is, see what doesn't work with. And you can do that in an enterprise software company. You can't do that with Ebola or air traffic control or Medicare. It doesn't translate to government, I think. And so unfortunately, the let it break philosophy is kind of playing at Elon's game. And I don't think that's, I don't think it's going to work.

Well, look, I'm going to push this idea of how we think about a response a little bit further here. Because, you know, at the end of the day, it's going to be the CEO making the decision, but I'm going to say if the communication leader is ignored, I'm going to blame them. I'm going to say if they had no role in the decision, then they failed in making their viewpoint impossible to ignore. And that means that they weren't just good enough at their job.

But the communications leader could get blamed at any given moment for anything. So they just need to be ready for that no matter what. That also comes with the job. Well, yeah, but sure, but look at you made a kid who's job isn't just about offering advice. It's about making sure that the advice is heard, considered and factored into the decision making. So for sure.

If the CEO is not listening to you, if they're not, you know, it's not just their failure, I feel like it's part of yours because, you know, your job isn't just to speak up. It's to make sure that leadership stops and thinks. You have to be adaptable at that. You have to roll with you can't be too rigid and just like this will not work. You kind of have to help them play it out or play it out for them and maybe, you know, it's not binary.

Maybe you can help make an adjustment that makes, you know, the decision less bad. All right. Well, let's get back to the current situation with Elon Musk. The question I think in my mind is, are other companies being held by association or otherwise? Are other companies being impacted, helped or hurt by the way Elon Musk is going about this in government? Yeah. I'd say for other companies, Musk is clearly a double-edged sword on one hand.

He's sucking all the oxygen, you know, if there's outrage to be had, it's aimed at him first. And that gives up plenty of coverage to companies that might otherwise be the target of public scrutiny. Yeah. But on the other, I don't know. He's redefining what it means to be politically lined and companies that might have been conservative and they might have been differently now, look, moderate by comparison. Exactly. No, I think that's right. So I don't know.

That could be a liability if they're trying to play both sides here. So in a way, I think he's creating a new spectrum. You know, he's not just prohibit, he's aggressively publicly taking positions that put him beyond what corporate leaders would ever say out loud. Maybe. I think that shifts expectations for everyone else. Yeah. I think the interesting thing for me is that both for Trump and for some elements of corporate

America, Elon is acting as a human shield. A lot of the negativity about the things that he's doing at Trump's supposed direction, but in partnership with Trump, a lot of that negativity is being directed at him. We talked about it last week, like the Tesla cars, especially the cyber truck is like a proxy for the policies that people don't like.

And then for other corporations here in the US, other business leaders who are looking to align themselves with Trump either for ideological reasons or for business purposes or just defensively, to your point, Elon has completely blown the curve. You could sort of look at anything any other CEO might be doing in support of Trump or in parallel alignment with Trump. And it looks like nothing compared to what Elon's been doing.

I think that's a great way of putting it that he's serving as a human shield. He's absorbing all the heat for Trump, just like he's absorbing the heat for now. For now. For the corporate America. Yeah. You know, if the public wants someone to lash out over deregulation, over anti-dei policies or over-tech monopolies, it's must first every time. And for every CEO who wants to be a pro-business without being the center of controversy, I don't think that's pretty useful.

But I'd say here's what the risk is. He's put himself out there so far that he's redefining what it means to be aligned with Trump and these policies. So it's no longer about a CEO being quietly supportive. It's about whether they're in the musk orbit. The thing I think that I focus on is the collateral damage from that. And Tesla is experiencing it unlike any other company, I think, right now. The products are a proxy for Elon, a proxy for the policies people don't like.

And we see graffiti on cyber trucks and people literally dumping eggs on them and worse. It's really remarkable. I can't think of another time when a company's products have been attacked in this way for something that doesn't have anything to do with the company. Yeah. There's certainly a problem having a company that's inseparable from its CEO because Tesla is not just collateral damage. It's a proxy war for musk politics, as you said. He's not just a business leader at politics.

He's a political force and like it or not, Tesla is going to be carrying the consequences.

And getting back to what we really started, the thing that you were looking to talk about again was if they had played it differently, not talking about the transition or any time in recent, if they're approached with Tesla had been different, if they had a communications department, if they had, I think, even more importantly, any advertising at all about the company and its products, you wouldn't have this such a close association between Elon

and Tesla going into this situation where now it's just been exacerbated and Tesla shareholders, Tesla employees, I think are the ones who are feeling it. Yeah. I don't know. But Tesla really wants to fix the reputation in Europe. The answer is not going to be more advertising. I think it's going to be more engagement. It's going to be the same situation here in the US. The problem is not that people don't know what Tesla stands for. It's that they do and they don't like what they see.

So the real work isn't running ads. I think it's getting the right stakeholders to see for themselves that Tesla is walking the wall. And bringing up advertising just because I think it's probably the most efficient channel for delivering that message. But I don't think they have that message right now. You don't see a lot of product messaging obviously because they don't have a communications department. The emphasis just has not been on the product.

Well, I still think there's a little bit more here in the end. I mean, not all the answers are going to be through your own media here. But for me, the term I like using is architecting transparency. So architecting transparency is a little bit more effective than just trying to control the message. You know, you can't message your way out of a disconnect between expectations and reality.

But what Tesla could do is build in real transparency so that third parties, regulators, partners, even skeptical customers can see that their actions are in alignment with their claims. And that's going to carry far more weight than any kind of paid advertising campaign. But if you're, you know, if your behavior and expectations don't match, there's no amount of advertising that's going to save you here. So that's part of the issue.

You could spend billions in advertising, but if customers feel misled or employees don't believe in the mission or if stakeholders see a gap between words and actions, that's going to be where the world damages. And they don't need to have a better ad budget. They just a better alignment between their promises and reality. I think that's fair. One thing that has been on my mind is we think about this.

We call it the Tesla scale of impact on a company because of the policies in this period, especially related to Trump. Who would be second, a distant of super, like Pluto, distant second, but who would be second on that scale as far as impact to a company's reputation because of their interaction with Trump policies? It has to be target. Okay. We made that decision in January to announce changes to their diversity policies and it was swept up in the frenzy of news that week.

But it has had a much longer tail than I think anybody expected. And now we are hearing, this could be a topic for a future podcast. Now we are hearing about potential boycotts, one day boycotts, one month boycotts, who knows how much will materialize. But I think that it's nowhere near the impact that Tesla has experienced, but it's certainly a very interesting case study for the distant number two on that scale.

So look, Target is the best example of how a single decision can create narrative accretion. It wasn't just one headline. It was the rolling, sustained backlash that stuck. They made changes to their DEI policies. And before they could control the framing, the story had already hardened, right? Target gave us to conservatives. Target baked back down to DEI. And the impact is lasted. So we still hear about Target as the company that got burned. Other companies saw that and of adjusted.

They're making the same moves just with better timing, better messaging and less visibility. So certainly, yeah, Target was the lesson everyone else took notes. Target was the high water mark, I think, on this diversity, the changes to diversity policies and I think the other companies were in a similar time frame, time, the Walmart McDonald's meta, certainly. And some companies went further than Target did.

But in that weekend, you would have thought that Trump himself killed DEI at Target because everybody was talking about Trump. They took that moment at the end of that week to make their diversity policy changes. And then the coverage, immediate coverage was really about Trump. And I'm guessing in that moment, they probably felt like, okay, well, everybody understands that it wasn't us, it was Trump. But I get it. The tail has been so long on this. Your narrative accretion. I'm, yeah.

Got a new term, which is a good one. You like it? Yeah. I do. I understand it. Okay. All right. So I guess as we wrap up, there is one other thing that I'm thinking about as well. We talked a little bit about briefly about not having a translator and having two highly visible cases. And others, what this means for companies, communications mindset. So I would say every company's got a communications mindset, whether they realize that or not.

It's not about having a PR team or corporate affairs function. It's about how leadership views communication as a tool for influence strategy and risk management. And in Tesla's case, their communications mindset is just radically different from traditional corporate structures. For most companies, communication is about shaping external narratives, managing reputation and ensuring that there's alignment across stakeholders.

But for Tesla, it's purely about direct leadership communication with no filter, no safety net and no traditional messaging infrastructure at all. Right. So I would say, you know, musk's mindset, whether intentional or not, it's created a model where there's no distinction between the CEO and the brand. There's no comms, team to absorb the backlash. There's no structured approach to stakeholder engagement. Everything flows directly from musk in real time.

And I think that's why Tesla's reputation swings as dramatically as he does.

But here's the thing, you know, as we're closing out, I just want to suggest that communications mindset can determine competitive advantage. And if you know, if a company sees communication as a strategic force, it can amplify its ability to shape the market position, build trust and mitigate risks. But if leadership sees communication as reactive, secondary or optional, then it becomes more of a liability than as an asset. And I think now Tesla's kind of living the consequences of that choice.

So for companies watching this play out, to me, the lesson isn't just about musk, it's about how your leadership team views communication. And if your communications mindset is weak, then your influence on the market is weak. If you don't intentionally define your approach to comms, then your media, your competitors, your critics are going to do it for you. Great point to end on and could not agree more. That is our show for this week.

We want to thank Shawn P Neal and the PeopleForward Network for making our podcast possible. If you'd like to tell us what you think, there you have a topic you'd like to suggest for our show. We'd love to hear from you. We actually had listeners write in and ask us to talk about Tesla, which was great, although we were already planning to do it just so you know. Our email address is podcast@ocrnetwork.com. Communication breakdown is a production of the Observatory on Corporate Reputation.

I'm Steve Dowling. And I'm Craig Carroll. Thanks for listening. We'll be back next week. [MUSIC] #CorporateReputation, #Trump, #TechIndustry, #Tariffs, #Tesla, #diversity, #DEI, #StakeholderEngagement, #CommunicationStrategy #DOGE #MAGA #Musk #Elon #ElonMusk