Is Tesla Socially Responsible?

Tesla is an electric car manufacturer founded in 2003. Its original mission statement was to accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible.” Currently, 46000 people are employed by the company. The first 3 years of the company was mainly focused on financing. According to Tesla’s website, they funded over $53 million privately and then took out a $465 million dollar loan from the Department of Energy. This was paid back in May of 2013 9 years ahead of schedule.

Carolls CSR pyramid is a model that acts as an outline of what a business needs to do to become socially responsible. On the pyramid, there is; Economic- how the business performs financially, Legal- Is the business staying within the confines of the law, Ethical- Is the business doing more than what’s expected of them and finally Philanthropic- Is the business giving back to the community in any way?

Tesla has reached an economic goal, the company posted a net profit of $312 million in Q3 of 2018, this is after a long period of losses. In fact, before this Tesla only made a profit in 2 quarters (2013 and 2016), as you can see from the figure on the slide Tesla’s revenues have been massive while still making a loss, this is due to the huge r&d Costs. In 2017 they had a revenue of 3.3 billion dollars. A Tesla model 3 they make 5,500 dollars per car sold. This doesn’t sound like a large amount but Ford on average makes $1100 per car sold, There is also a large amount of research and development Tesla undertake, at the moment they are researching into making their batteries in their car more efficient and on how to improve their autopilot in the Tesla model 3.

Legal- Tesla has been facing legal trouble over the past few years, for example, Teslas cannot be bought in 8 states as they do not allow cars to be sold directly to the customers as Tesla does, without showrooms. OSHA has also looked into the safety of Tesla workers after a series of injuries at Tesla factories.

The launch of a Model X SUV Tesla is looking to hire more engineers, they plan to hire veterans to work for them Arnnon Geshuri, Teslas Vice-president of human resources has said  “We want to be known throughout the veteran community as a great place to work,” an opinion shared by Camille Ricketts, Tesla’s director of communication. Tesla holds monthly veteran meetings where these veterans can have their voice heard about how Tesla can improve. This has all been designed to support and empower people who have fought for the United States.

Tesla has donated $37.5 million to STEM programmes within the US with the donations going to many different institutions for example over 120 000 dollars will go to the Robotics Education and Competition Foundation, which aims to bring robotics to students around the country. More examples are displayed in the table visible now. Another part of this donations is for 250 scholarships will be given out to colleges around the US. There could be another motive for these generous, Tesla wants to have as many future employees as possible. This investment can help find prospective future employees and train them in the required field, so in their eyes, its a win-win as students are better educated and more passionate about the fields of Science Technology Engineering and Maths while Tesla can enjoy forward-thinking future employees.

Another example of philanthropy is Tesla giving 150 solar panels away to low-income households

There are a large number of shareholders in Tesla, they are well valued by the company as investors supported them in the early stages when huge amounts of research and development were needed to get the company off the ground, it wouldn’t have been possible for Tesla to grow without them. according to NASDAQ, the number is 855 shareholders and a market capitalisation of $33 billion. Tesla’s shareholders are very interested in the profitability of the business as they can see a promising return in November 2013 the stock price stood at 135 dollars per share, the same time in 2018 the stock is now currently 338 dollars per share a 150% increase. Tesla also value shareholder opinion, they make sure that any investor knows what direction Tesla is going in. The AGM is broadcast on the Tesla website so every investor can see it. To increase the amount of dividends paid to shareholders the business needs growth along with the market, Tesla allows this, they allow other electric car companies to use their patents, this allows for small companies to not be blocked being innovative by patents, increase currently the market size, the increase in demand can increase Teslas Profitability in the long run.

However there are still steps Tesla could take to improve shareholder happiness, the controversial tweet that Elon Musk tweeted saying he had funding secured to take tesla private caused 2 investors to file lawsuits against the company and the share price fell by 6% and cause an investigation by the department of justice

There are also steps to take regarding worker welfare in Tesla. Former Tesla worker Dezzimond Vaughn tried to organise a union to give workers more power. The managers found out that union meetings were happening at his house and started trying to force him to quit according to him. After he didn’t quit he was told he was being fired anyway. Union membership is a great way for employees to feel empowered and have their opinions heard by higher-ups. It can increase job motivation and performance, I think Tesla allowing for the formation of unions will make it act more responsibly as workers now have some power over them.

Worker safety is a crucial factor, Herzberg’s dual factor theory addresses motivation based on 2 factors, Motivators and Hygiene factors. Motivators are factors that can increase an employees level of motivation for example promotion or having achievements recognised. Hygiene factors are things that must be in place, dissatisfaction occurs if these are absent. Workers safety is a massive hygiene factor, there is evidence of this hygiene factor not taking place in Tesla factories. Workers in Fremont California, Teslas main factory, report that accidents happen almost every day. This firstly is a great cost to the company as expenses are paid to the injured person while they recover, workers still working would need to cover and make up for the injured persons work while they are away. Worksafe, an American company focused on making sure companies are operating safely. They found that Tesla’s recordable incident rate was at 8.8%, to put that in perspective the average sawmill has an injury rate of under 7.5%.

A modern-day company having 1.3% higher injury rate than a sawmill is unacceptable, Tesla needs to address this. A cheap way of doing this could be electing workers to become health and safety representatives, this could also tie in with the union as mentioned before. The representatives can report what aspects of the day to day running could be safer. This can also increase motivation as the elected employee feels a greater sense of empowerment.

Ref:

Smith, R.E., 2011. Defining corporate social responsibility: A systems approach for socially responsible capitalism.

Tesla Motors. (2011). Go electric. Palo Alto, CA

http://www.teslamotors.com/goelectric/environment

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Elon Musk (2014). All Our Patent Are Belong To You. http://www.teslamotors.com/it_IT/blog/all-our-patent-are-belong-you

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