Although Elon Musk’s success as the Tesla CEO has been a success, his controversies with Twitter have had considerable impacts on Twitter and Tesla. This essay critically evaluates the controversial actions of Elon Musk and the response of the senior management of Tesla. The decline in the valuation of Tesla’s stock suggests a decrease in investors’ confidence fueled by Musk’s management priorities on Twitter. According to Šević et al. (2023, p.47) survey, positive assertions about the Tesla brand also declined after Musk’s Twitter acquisition. Although the survey did not directly associate the decline with Musk’s decisions regarding Twitter, its occurrence coincides with Musk’s controversies and political tweeting. This suggests that the public image of an executive brand leader can affect the perception of related brands.
Tesla stock experienced a 20% decline by Dec 2022, only a few months after Musk purchased Twitter (Arroyo-Machado et al., 2023). According to Nasdaq, the decline was substantial and unusual compared to the overall stock market. The impact of Musk’s engagement with Twitter not only affects Tesla’s stock performance but also demonstrates his attention shift from Tesla to Twitter. The distraction from his primary responsibilities at Tesla and the financial challenges facing Twitter raises doubt about Musk’s ability to lead multiple big companies simultaneously. The Tesla management and investors expressed concerns that the Twitter acquisition could divert financial resources from Tesla and potentially hinder the innovation and progress of the company.
Initially, the Tesla senior management faced the difficult task of balancing the innovative image linked to Musk with the mandate of addressing the controversies around his Twitter activities. Earlier, the management attempted to downplay the implications of Musk’s tweets and emphasized that his individual opinions are distinct from Tesla’s (Palmer and Weiss, 2022, p.154). However, they determined that Musk’s controversies impacted Tesla’s stock and took a reactive approach (Auten, 2023). In their attempt to contain Tesla’s fallout emanating from the CEO’s behavior on Twitter, they distanced the company from Musk’s tweets, stating that his tweets do not reflect the company’s official stance. Their response was to portray the CEO’s tweets as personal and not corporate to buffer Tesla from the direct link with his questionable statements and actions on Twitter. This strategy had limitations in that Musk’s responsibilities as the major shareholder and CEO made it difficult to detach his professional and individual identity.
The brand values of Tesla have traditionally been based on sustainability, technological leadership, and innovation. However, Musk’s tweets involving political statements, war, and disputes risked diluting Tesla’s core values. Consumers and the public may have started polarizing the opinions represented by Elon Musk. This misalignment with the core values of Tesla challenged the senior management to maintain and restore a positive image of Tesla in the view of stakeholders and customers. The decline in the stock performance manifests as a potential brand crisis. It reflects the investors’ concerns about the effect of Musk’s actions on the company’s financial performance (Jia and Xu, 2022, p.437). As such, the senior management faces the challenging role of reassuring investors that Musk’s actions on Twitter will not impede the financial performance of Tesla.
The management needed to enhance employee retention and morale. Elon Musk’s controversies could create a difficult work environment impacting talent retention and productivity (Benton et al., 2022). The commitment of the senior management to establishing and promoting a positive and conducive environment for creativity, research, and innovation culture could only be supported if Musk’s actions persist in drawing negative attention toward Tesla. Employee confidence in the brand and its future could only improve if the senior management resolves reputational issues. This could make it difficult to retain the highly talented and experienced staff and further hinder the growth of Tesla.
Since Elon Musk acquired Tesla and the corresponding controversies, the Tesla stock performances have been inconsistent, declining sharply within the first few months of acquisition before improving at inconsistent rates. Whether the declines directly correspond to Musk’s engagements with Twitter is still being determined. Still, the senior management of Tesla has turned what could have been a brand crisis into a manageable incident. The senior management contained the impact by reaffirming the investors about Tesla’s dedication to its values and establishing a clear distinction between Musk’s individual views and the broader company mission (Pfeffer et al., 2023, p.76). However, the situation may require Tesla’s senior management to engage in professional crisis management to rebuild trust, align Tesla’s strategy to its core values, and mitigate reputational damage. The professional crisis managers would help the company decide whether Elon Musk should step aside as Tesla’s CEO based on the impact such a decision would have on the company. The team of professional crisis managers would involve public relations experts, communication experts, and stakeholder partnerships to explore the intricacies of the brand incidence.
If Tesla puts me in charge now to solve the brand challenge, my approach would involve strategic brand management, proactive crisis moderation, and transparent communication. Through transparent communication, I reassure stakeholders, employees, investors, and consumers by acknowledging the brand challenges in the bucket. To strengthen the core values of Tesla, I would showcase the firm’s commitment to technological leadership, innovation, and sustainability through visible initiatives. Presenting ongoing projects, corporate responsibility, and milestones would demonstrate the positive contributions of Tesla that overshadow the negative controversies established through the CEO’s tweeter engagements. To manage the crisis, I would revisit the social media policies of Tesla to ensure that all executives, starting with Musk, follow the guidelines and lead by example. This would also include setting up clear guidelines for making public statements on sensitive issues to minimize the occurrence of other controversies that can harm the brand.
The essay critically evaluated the controversial actions of Elon Musk on Twitter and the response of the senior management of Tesla. The most pronounced impact on the Tesla brand has been its stock performance. This is because investors associate Elon Musk with Twitter and Tesla, suggesting that negative sentiments around one of his brands can influence the perception of the other. The initial strategy of the senior management underplayed Musk’s responsibilities as the major shareholder and CEO, making it difficult to detach his professional and individual identity. The senior management contained the impact by reaffirming the investors about Tesla’s dedication to its values and establishing a clear distinction between Musk’s individual views and the broader company mission. For further crisis mitigation, professional crisis managers should involve public relations experts, communication experts, and stakeholder partnerships to explore the intricacies of the brand incidence. The professional crisis managers would help the company decide whether Elon Musk should step aside as Tesla’s CEO based on the impact such a decision would have on the company.
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Jia, Q. and Xu, S., 2022. An Overall Analysis of Twitter and Elon Musk M&A Deal. Highlights in Business, Economics and Management, 2, pp.436-441.
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