By Paul Jacobson -- Let us count the ways of insane dysfunction found in the Tesla-Elon Musk-Hertz schlimazel. We have Hertz, a global brand just out of bankruptcy, announcing last week -- complete with a video from Tom Brady -- that it’s ordering 100,000 electric cars from Tesla. And this is followed by a tweet from Musk saying, "I’d like to emphasize that no contract has been signed yet.”
But wait. There's more.
Hertz said Tuesday that deliveries are already underway, and directed people to a link on the Hertz web site where one can reserve a Tesla.
But there's no confirmation that there’s actually a done deal between Hertz and Tesla. To which the company says, “We don’t discuss the details of our business relationships or discussions with any auto maker or partner."
Never mind that Hertz CEO Mark Fields had just recently appeared on CNBC’s Squawk Box to talk up the deal.
Stock for both companies shot up. Tesla became a trillion-dollar company, which increased Musk’s personal wealth to more than $300 billion. On Tuesday after the Musk's tweet, Tesla’s stock dropped three percent.
Peter M. DeLorenzo, a former Detroit auto marketing executive and one of the industry's most acerbically astute observers, summed it up best:
"Hertz is insisting that deliveries have already started. Either Hertz is making that up, or Musk is so out of the loop in Tesla's day-to-day affairs that he even has less credibility -- if that's even possible - than he already has when it comes to his remarks."
DeLorenzo coined the “St. Elon” title in recognition that Musk gets away with stuff that no other CEO of a listed company could.
The SEC investigated a 2018 Musk tweet about a potential Tesla buyout. He and the company each paid $20 million in fines, and Musk agreed to have lawyers approve his tweets going forward.
But on Monday, those Musk lawyers were either asleep or out of the loop. But gee heck, what's another $20 million fine to a guy worth around $300 billion running a company valued at around $1 trillion?
Here's the weird reality: If any other automaker announced a big fleet deal with a rental company, its stock would happed drop because that signals weak consumer demand.
Not so in the surreal world of Tesla, where its stock jumped and Musk tweeted that Hertz is going to pay full price for the cars. That's more than $4 billion.
There's not an airline company in the world that pays retail for new airliners. And there's no rental car company, especially one just emerging from Chapter 11, that pays list price for cars. Not even if they come from St. Musk's company.
What does this all mean? More confusion and contradiction, leading to new shareholder lawsuits and maybe another SEC investigation.
The Wall Street Journal reports the Hertz-Tesla deal was under negotiation for months. So it's reasonable to wonder what the corporate communicators were doing to plan for such a big announcement.
But wait: Tesla doesn’t have a PR or communications department*. So the WSJ went with, “Tesla and Mr. Musk didn’t respond to requests for comment.
It was online media site electrek.com that unearthed the dissolution of Tesla’s PR shop, and the topic was expanded upon in a hilarious post by Jalopnik reporter Jason Torchinsky, who shared his escalating, albeit one-sided, email communications with the company.
So, we have an egotistical CEO, the world’s richest man, whose company has gone from a $100 billion to $1 trillion valuation in a year – something that took Amazon eight years to accomplish. Musk apparently believe he has license to do whatever he wants, and no PR or legal department is going to get in his way.
Fine, but Tesla shareholders – happy now no doubt – may bitterly regret the day the PR shop died.
Here's why: The company just recalled 12,000 vehicles to address automatic emergency braking software that may activate unexpectedly while driving. U.S. safety regulators were already peeved. Before this latest recall, Tesla chose to not issue safety recalls for over-the-air software update that address safety threats.
The National Highway Traffic Safety Administration is already investigating autopilot problems on 765,000 Teslas, following reports of dozens of crashes into roadside emergency vehicles that killed one person and injured 17.
If the government finds Tesla is deploying driver assist technologies into the real world before they’re perfected, the lawsuits will commence -- as will the very real reputation damage.
And Elon Musk’s super-stardom won’t shield the company while the board demands to know why the company isn’t responding cohesively to attacks coming from all sides.
In which case I recommend they hire some good crisis communications. Like us.
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