Tesla Crisis Media Relations Case Study - A45612931 - An Analysis of Tesla's Response to the Tesla Model S Fire Incident - Yuming Huang ADV860 ...

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Tesla Crisis Media Relations Case Study - A45612931 - An Analysis of Tesla's Response to the Tesla Model S Fire Incident - Yuming Huang ADV860 ...
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
Tesla Crisis Media Relations Case Study - A45612931 - An Analysis of Tesla's Response to the Tesla Model S Fire Incident - Yuming Huang ADV860 ...
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
Tesla Crisis Media Relations Case Study - A45612931 - An Analysis of Tesla's Response to the Tesla Model S Fire Incident - Yuming Huang ADV860 ...
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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Tesla Crisis Media Relations Case Study - A45612931 - An Analysis of Tesla's Response to the Tesla Model S Fire Incident - Yuming Huang ADV860 ...
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 Crisis Media Relations Case Study - A45612931 - An Analysis of Tesla's Response to the Tesla Model S Fire Incident - Yuming Huang ADV860 ...
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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highly flammable liquid” (Musk, 2013).

Additionally, some of the coverage quoted sentences from the blog to describe the point that
conventional gas-powered cars were more vulnerable (Hirsch, 2013; Owens, 2013; Woodyard,
2013). Los Angeles Times, San Jose Mercury Journal, and USA Today used this same quote
from Musk’s blog, "had a conventional gasoline car encountered the same object on the highway,
the result could have been far worse" (Musk, 2013).

Furthermore, quotations were cited to explain that the circumstance would be worse if a
conventional gasoline car caught fire on a highway. On the subject, Musk said, “a typical
gasoline car only has a thin metal sheet protecting the underbody, leaving it vulnerable to
destruction of the fuel supply lines or fuel tank, which causes a pool of gasoline to form and
often burn the entire car to the ground". Los Angeles Times and San Jose Journal quoted this
statement.

Besides described the comparison between gas-powered and electric cars, most of the coverage,
which has been mentioned above, reported on Musk’s blog content about what caused the fire
and how the car correctly performed. From Musk’s blog, “he said a curved metal component was
apparently the culprit in causing a Tesla to catch fire, writing that the object’s shape led to a
powerful hit” (The associated press, 2013), New York Times wrote.

B. Negative messages
Tesla and Elon Musk being defensive
Prominent media used “defense” in their headlines, which implied that Tesla had something to
be guilty about. USA Today said Musk was “never shy about personally blogging in defense of
his company's electric car” (Woodyard, 2013). He “has taken to the Web against in reaction to
fallout over a video showing a Model S that caught on fire” (Woodyard, 2013). Although Musk’s
blog was a direct response to the incident, Tesla would not like reports, which described their
company and Musk as being defensive.

Elon Musk wanted to stop Tesla bleeding
Los Angeles Times described Musk’s reaction as a move to “put out the financial fire” (Hirsch,
2013). USA Today wrote, “Musk's reaction comes as Tesla shares fell” after the accident
(Woodyard, 2013). The blog attached the email from the owner, who experienced the fire, to
substantiate Tesla’s communication with him. However, Time magazine depicted this supportive
email as a way to offer “comforting words to current and potential clients and investors”
(Rayman, 2013).

Elon Musk blamed firefighters

	
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With the headline “Elon Musk blames firefighter for making Tesla sedan’s fire worse”(Rayman,
2013), the lead of the Time’s article stated, “the fire fighters didn’t read the drivers’ manual”.
This coverage explained the fire spread because, “first responders wrongly punctured a hole in a
metal firewall”. Obviously, the content, in some degree, distorted the meaning of the blog. Musk
had pointed out that the fire could have been extinguished easier if the firefighters had not
punctured a hole in the plate. Musk, however, did not intend to blame the firefighters.

VI. Implications
Tell the truth, and be transparent
One of the best ways to stop Tesla’s rumors and calm people’s anxiety is telling the truth and
being transparent. In Musk’s blog, he explained what, how, and why of the accident in detail.
Moreover, in the blog, he also posted the email from the owner whose Tesla sedan caught fire.
All the content showed that Tesla is telling the truth, and being transparent. This resulted in
coverage that corresponded to key messages in Musk’s blog, which helped Tesla achieve its
communication objectives.

CEO directly responses
When an organization is facing a complicated and serious issue, the boss might be the suitable
person to respond to the crisis. The media would not stop asking questions unless receiving
information from the boss. Owners and customers also desire to listen to the voice from the most
important person in the organization. The situation could be worse, if the boss leaves reporters to
write about issue and explain it without official response and information.

Avoid using jargon
In Musk’s blog, he clearly explained the complicated mechanical problem without using jargon.
Without jargon in the blog, there is no barrier to understand the situation. This contributed to
more quotes in coverage, because reporters knew their readers can understand what the blog is
talking about without their explanation. Meanwhile, it prevented mass media to misunderstand
and distort the blog’s meaning.

Well prepared before releasing
When a company faces a serious circumstance, an immediate response is needed. Tesla achieved
this through the first 62-word statement. However, it is important to consider quality in addition
to time. Tesla again achieved this by having Musk follow-up on the brief statement with a
thorough blog post. As such, this case teaches us that companies can put communications,
business, legal, and engineering teams together to formulate their final response in an effective
manner that is still time appropriate.

	
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Appendices

             Appendix A

             Appendix B
	
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Appendix C

	
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Reference
Elliot, H. (2013, October 3). The Tesla fire is a textbook PR problem-and they should fix it.
Forbes. Retrieved from
http://www.forbes.com/sites/hannahelliott/2013/10/03/the-tesla-fire-is-a-textbook-pr-problem-an
d-they-should-fix-it/

Hirsch, J. (2013, October 4). Tesla’s Elon Musk defends Model S electric car after fire. Los
Angeles Times. Retrieved from
http://articles.latimes.com/2013/oct/04/autos/la-fi-hy-musk-tesla-fire-20131004

Musk, E. (2013, October 4). Model S fire. Retrieved from
http://www.teslamotors.com/blog/model-s-fire

Owens, J.C. (2013, October 4). Biz break: Elon Musk says Model S fire proves Teslas are safer
than gas-powered cars. San Jose Mercury News. Retrieved from
http://www.mercurynews.com/60-second-business-break/ci_24241418/biz-break-elon-musk-says
-fire-proves-teslas

Rayman, N. (2013, October 4). Elon Musk blames firefighters for making sedan’s fire worse.
Time. Retrieved from
http://business.time.com/2013/10/04/elon-musk-blames-firefighters-for-making-tesla-sedans-fire
-worse/

Russolillo, S. (2013, October 4). Musk explains why Tesla Model S caught on fire. The Wall
Street Journal. Retrieved from
http://blogs.wsj.com/moneybeat/2013/10/04/elon-musk-explains-how-model-s-caught-on-fire

The associated press (2013, October 4). Elon Musk defends Tesla car after fire. The New York
Times. Retrieved from
http://www.nytimes.com/2013/10/05/business/elon-musk-defends-tesla-car-after-fire.html?_r=0

The associated press (2013, October 4). Tesla CEO explains cause of fire in electric vehicle. The
Washington Post. Retrieved from
http://www.washingtonpost.com/business/economy/tesla-ceo-explains-cause-of-fire-in-electric-v
ehicle/2013/10/04/378dad9c-2bae-11e3-b139-029811dbb57f_story.html

Woodyard, C. (2013, October 4). Elon Musk defends Tesla electric car after fire. USA Today.
Retrieved from
http://www.usatoday.com/story/money/cars/2013/10/04/elon-musk-tesla-fire/2924423/

	
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