Tesla Is Used to Controversy. But Its Latest Scandals Could Hurt Its Bottom Line

Tesla’s troubles just keep piling up. Late last week, California’s Department of Fair Employment and Housing (DFEH) sued the automaker, alleging that Tesla had discriminated against Black workers at the company and ignored years of complaints from Black workers who said that they were almost continuously subjected to racist slurs in the workplace. Kevin Kish (DFEH Director) stated that the department has evidence that Tesla ran a racist-segregated workplace. “The facts of this case speak for themselves,” he said.

Tesla defended itself against the allegations in a Feb. 9 blog post, saying that the DFEH lawsuit “strains credulity,” though it’s not the first racial controversy the company has endured in recent months: last fall a court ordered the company to Spend $137Millions to Black contract workers for turning their back on racially-hostile work environments. It Paid outA similar case was filed earlier in the year and cost more than $1 million.
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The most recent racial reckoning was just one part of the growing controversy surrounding Tesla in recent months. This is the second time that Tesla has been convicted of racial discrimination since November. seven womenThe company was sued by the women for allegedly committing workplace sexual harassment. Jessica Brooks said that one of her female coworkers was harassed at work by her. She had to put boxes in front of her desk so they wouldn’t whistle at her.

And then there’s the cars themselves. Over a span of two weeks earlier this month, Tesla issued four recalls, including one for its vehicles’ “boombox” feature, which could interfere with pedestrians’ ability to hear warning sounds signaling that a car was approaching, and another over a feature of the company’s “full self-driving” software that caused the cars to roll through stop sign intersections.

It’s not as if Tesla hasn’t run into controversy before—for Musk, running afoul of regulators, business partners, investors and employees has to a certain extent been the price of doing business over the years. It was also the big lawsuit that started it all way back in 2009, when Musk and Tesla co-founder Martin Eberhard duked it out over the latter’s termination as CEO. It was also the most recent. U.S. Securities and Exchange Commission suit over Musk’s infamous “funding secured” tweet (Musk had signaled he was taking the company private, apparently as a joke). Musk testified in court last summer. Delaware Courtroom fighting investors over Tesla’s controversial 2016 decision to buy SolarCity, a troubled company for which Musk served as board chairman.

Some of those older controversies aren’t quite buried. An appeal in the SolarCity case could result in Musk being left out of $13B. ComingThis spring. Tesla also revealed earlier in the month that it had acquired S.E.C. Previously Subpoenaed the carmaker late last year asking for specifics on how Tesla was complying with the settlement over the “funding secured” matter, which required lawyers to vet Musk tweets that might affect his company’s stock price. Musk had surveyed his followers via Twitter to decide whether or not he wanted 10%.

There’s not much reason to think Tesla won’t sail through these most recent storms like it has all the others before. But there’s one major difference between the situation that the hotshot carmaker faces now, versus where it stood in the past. For years, Tesla was really the only game in town if you wanted a long-range, full size electric vehicle—and as it turned out, a lot of people did. There are now belated EV programmes by Ford and Volkswagen that will finally come to fruition. It gives Tesla its first serious challenge. Tesla has always acted as an exception to every rule—in carmaking, in leadership and in its approach to controversy. But if Musk’s singular company stops being so special, if customers can just as easily get an EV from Kia or Nissan, there’s no guarantee that the company’s cycle of scandals won’t start hitting them where it hurts: the bottom line.


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