Analysis-Tesla brand threatened by Musk harassment claim, criticism of
Democrats
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[May 21, 2022] By
Hyunjoo Jin and Paul Lienert
(Reuters) - Elon Musk has made a name for
himself and Tesla by breaking the rules, but the billionaire's latest
comments on politics and a claim of sexual harassment against him that
he said is untrue may hurt the brand in the eyes of some car owners and
employees.
Musk on Thursday denied a report by Business Insider that he sexually
harassed a flight attendant on a private jet in 2016, calling the person
who made the claim a liar.
The previous day, the Tesla chief executive, in the midst of a
contentious effort to buy Twitter Inc, said he would now vote Republican
instead of Democrat and called the Democrats a "party of division and
hate."
Tesla also was cut this week from the widely followed S&P 500 ESG Index,
which an index executive said was due to issues including claims of
racial discrimination within the company and crashes linked to its
vehicles.
Musk responded by calling such ratings around environmental, social and
governance (ESG) issues a "scam," and questioned how the index could
drop an electric car firm while adding oil and gas producers.
Tesla could not immediately be reached to comment.
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While Musk has made attention-grabbing headlines before - once calling
one critic a "pedo guy" on Twitter - the latest controversies again
raise the question whether his outspokenness will tarnish his
likeability. And - since Musk is so closely tied to Tesla - whether that
will that hurt the carmaker's sales, especially in California.
The left-leaning state is Tesla's largest market, accounting for nearly
40% of the company's U.S. retail registrations last year, according to
Experian data. Tesla sales in California were up almost 70% in the year
and it had a 6.5% share of all vehicles in the state, according to the
California New Car Dealers Association.
#BoycottTesla was trending on Twitter on Friday and several people
claimed they were canceling their car orders.
"In the past, I admired him for working to build a green business that's
transformational in energy use. But he is sadly becoming divisive as an
attention seeking troll and I no longer trust that he is dedicated to
the quality of his products. I will cancel my Tesla order," said J Yeh,
a Twitter user who describes herself as a lawyer who has lived in
several cities including Los Angeles.
"You lost a potential customer," a Twitter user named Ute Bauer from
Germany said, adding in German: "To anyone reading this, cancel your
orders."
Reuters was unable to confirm if any Tesla orders had been canceled.
Many institutional investors may stand by Musk no matter what given the
company's strong performance, but that doesn't mean some aren't
frustrated.
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![](../images/052122pics/busine1.jpg)
The logo of car manufacturer Tesla is seen at a dealership in
London, Britain, May 14, 2021. REUTERS/Matthew Childs
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"They're doing a lot of good things," said Taylor Ogan, CEO of Snow Bull
Capital, which owns Tesla shares. "It's just disappointing when that is tainted
by Elon Musk's antics. Elon Musk is the best thing for Tesla and the worst thing
for Tesla."
One Tesla employee, who asked not to be identified, voiced frustration that
Musk's efforts outside Tesla appeared to be hurting the carmaker's stock. "The
company needs to do something to address the issue," he said.
On Friday, Tesla shares dropped almost 9%, knocking about $66 billion off of
Tesla's stock market value and putting the stock at its lowest level since last
August, with analysts citing "distraction risks" from the Twitter deal. Musk
assured people on Thursday Tesla was constantly on his mind.
If discussion around water coolers at work focused on the sexual harassment
claim against Musk rather than Tesla products, the end result could be
"corrosive" for the Tesla brand, said John Smith, a former group vice president
at GM who ran global product planning.
Tesla and SpaceX employees also could become "a little bit rattled and angry"
because of Musk's anti-Democratic party comments as technology company staff in
California tend to be more liberal, said Jason Stomel, founder of tech talent
agency Cadre.
Bill Nelson, administrator of NASA, which relies on Musk's SpaceX to fly its
astronauts to space, told Reuters on Thursday that Musk has a strong team of
executives at the spacecraft maker and the agency's partnership with the company
was "going without a hitch."
And Musk still has plenty of fans online. Twitter user @JVega103 said he was a
Republican who owned a Tesla and just signed up for Tesla solar panels. "Thanks
for everything you do," the user tweeted.
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That left some industry observers wondering whether Musk and Tesla would simply
shake off these latest controversies, as they have in the past.
"Is Elon Musk now crazy, or crazy like a fox? He has earned the benefit of the
doubt as he is often playing chess when the rest of us are playing checkers,"
Northwestern University professor Erik Qualman said. "As Musk himself on
'Saturday Night Live' famously stated, 'What, did you think I would be normal?'"
(Reporting by Hyunjoo Jin in San Francisco and Paul Lienert in Detroit,
additional reporting by Tina Bellon in Austin, Texas; Noel Randewich in San
Francisco, Joey Roulette in Cape Canaveral, Fla; Ben Klayman in Detroit, and
Nivedita Balu in Bengaluru; Editing by Peter Henderson and Rosalba O'Brien)
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