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1. A R A B A M E R I C A N U N I V E R S I T Y F A C U L T Y O F
G R A D U A T E S T U D I E S A D M I N I S T R A T I V E A N D
F I N A N C I A L S C I E N C E S D E P A R T M E N T
ACCOUNTING AND AUDITING
COURSE: BUSINESS ETHICS
PRESENTED BY: ABDELRAHMAN ABUSALAMEH
DR.MAJDI KHALILI
Tesla Accelerates the Transition to Sustainable Energy “ Case 2 “

2. • Tesla History.
• Case discussion.
• Corporate Social Responsibility at Tesla.
• Case Questions Answers:
1. In what ways does Tesla address the interests of its stakeholders through its corporate social responsibility
strategy?
2. What ethical issues has Tesla faced? What ethical issues is Tesla likely to face in the future?
3. What environmental issues do Tesla products work to address?
Presentation topics

3. • Tesla Motors is named after electrical engineer and physicist Nikola Tesla. Nikola Tesla was an
inventor, electrical engineer, mechanical engineer, and futurist best known for his
contributions to the design of the modern alternating current (AC) electricity supply system.
• Tesla Motors, Inc. is an American company that designs, manufactures, and sells electric cars
and electric vehicle powertrain components.
• Tesla Motors was incorporated in July 2003 by Martin Eberhard and Marc Tarpenning, who
financed the company until the Series A round of funding. Musk led the Series A round of
investment in February 2004, joining Tesla's Board of Directors as its Chairman.
• Tesla's primary goal was to commercialize electric vehicles, starting with a premium sports
car aimed at early adopters and then moving as rapidly as possible into more mainstream
vehicles, including sedans and affordable compacts.
• Musk was the controlling investor in Tesla from the first financing round, funding the large
majority of the Series A capital investment round of US$7.5 million with personal funds.
Tesla History

4. Tesla History
• In 2009, Tesla was struggling financially, with less than $10 million to its name.
Fortunately, the company was saved by Daimler AG, the automotive company
behind Mercedes, which bought a 10 percent stake of Tesla for $50 million, and the
U.S. Department of Energy, which gave Tesla a $465 million loan. To remain
financially stable, Tesla filed an IPO” initial public offering” in 2010, raising $226
million

5. Tesla History
• With three successful vehicle launches under its belt, Tesla began to focus on the
energy side of its business, unveiling Solar Roof solar tiles as well as Powerwall and
Powerpack industry batteries to store converted solar energy. To support this focus on
energy, Tesla strategically acquired SolarCity, a solar energy service company, in 2016
for $2.6 billion. To seal the deal, the company changed its name from Tesla Motors to
Tesla, Inc., in 2017, signifying the company’s shift from a car manufacturer to a
sustainable energy solution company.
• In 2006, Elon Musk spelled out Tesla’s master plan for sustainability: build and sell a
successful Tesla Roadster in order to fund the development of more affordable models
while providing zero-emission electric power generation options, Tesla delivered on
that plan by creating an entire sustainable energy ecosystem including Powerwall,
Powerpack, and Solar Roof energy solutions. These enable homeowners, businesses,
and utilities to manage renewable energy generation, storage, and consumption

6. Case Discussion #1 Dealing with Ethical Misconduct in the
Workplace
• On June 4, 2018, Business Insider reported that inefficiency at Tesla’s Nevada Gigafactory
had led the company to scrap $150 million in raw materials.
• Martin Tripp, who was identified as the leaker of the story, claims he suggested to his
bosses that scrap should be reduced in order to be less wasteful and create a safer working
environment.
• Martin Tripp wrote an email to Musk that went unanswered. He decided to share data from
the company’s internal production database with Business Insider and was later fired and
sued for $167 million.
• Tripp filed a counterclaim, saying Musk defamed him when Musk told media outlets that
Tripp had threatened a mass shooting. Additionally, the security manager at Tesla’s
Gigafactory, Sean Gouthro, filed a whistle-blower report against Tesla with the SEC.
Gouthro says Tesla behaved unethically in tracking down the leaker, claiming Tesla’s
security team hacked Tripp’s phone.

7. Case Discussion #2 Focusing on Consumer Safety
• Two vehicle fires negatively affected Tesla’s reputation for vehicle safety in 2013,
just as the company was finally getting its feet under itself. Musk defended the
vehicles, stating in a company blog post that the risk of fire in a Model S was five
times less than the average gasoline car. Tesla used the media attention to its
advantage, touting the safety features of the vehicle, which contributed to the safety
of the two drivers. Regardless of the statistics, Tesla made the ethical decision to
prioritize both the safety of its customers as well as its customers’ peace of mind by
outfitting vehicle bodies with a triple underbody shield. Not only did new vehicles
come with a titanium underbody shield and aluminum deflector plates, but Tesla
offered to retrofit the shields to existing Tesla customers for free.

8. Case Discussion #3 Struggling Supply Chain
• Due to the Model 3 being the first mass-produced vehicle by the firm, Tesla has had difficulty meeting production and
delivery targets. Tesla attributed its production problems to the weakening of its supplier network. Despite wanting to
construct and assemble everything in one location, the company received parts from all over the world. Tesla built the
Gigafactory 1 facility north of Sparks, Nevada, in 2014 to bring battery cell production in-house and increase output. This
plant is intended to dramatically lower battery cell costs while generating thousands of jobs. Through economies of scale
and a decrease in waste, battery cell prices have decreased. In the end, this lowers the cost of the vehicles for consumers.
• Tesla purchased Riviera Tool & Die in 2015 to improve Model 3's manufacturing process . Later on in the year, Tesla raised
$738 million by selling shares of its stock to pay for a number of infrastructural initiatives, such as a battery factory and a
new production facility. At Gigafactory 2 in Buffalo, New York, Tesla started producing solar cells and modules in 2016.
In order to support electrical components for Superchargers and energy storage products, the company developed new
production lines, leading to the creation of close to 800 j obs.
• Though Tesla has made strides in improving its supply chain and production facilities, the company has attracted criticism
from its own employees who have had irregular schedules due to production line issues and unexpected maintenance. Tesla
laid off 7 percent of its full-time employees, cutting more than 3,000 jobs across the company in 2019 ahead of a projected
dip in sales industry-wide.

9. Case Discussion #4 Tesla’s Leadership
Challenges
• A number of comments Musk made on the open web hurt both his and the company's
reputations. For instance, Musk made a significant overestimation when he predicted Tesla
will sell up to 200,000 Model 3 sedans in the second half of 2017. In the end, the company
only managed to produce 55,000 throughout that time. Later that year, Musk posted on
Twitter about his intention to use Saudi Arabia's national wealth fund to finance the
company's privatization. The scheme, which ultimately failed, resulted in frantic stock
trading, which raised the company's stock price by 10%, and led to a Securities and
Exchange Commission (SEC) complaint. This was perceived by many as a breach of moral
judgment. Musk was accused of securities fraud by the SEC as a result of the false and
deceptive tweet. Musk reached an agreement with the SEC and consented to resign as
chairman of Tesla. Although Robyn Denholm took over as chairperson, Musk remained the
company's chief executive officer. A $20 million fine was paid by both Musk and Tesla.

10. Case Discussion #4 Tesla’s Leadership
Challenges
• Musk’s Twitter rants have continued to attract negative publicity and threaten the
performance of the company. In March 2020, just as the COVID-19 pandemic began to
affect U.S. business, Musk tweeted, “The coronavirus panic is dumb.” As discussed earlier,
Musk pushed to keep its California factory open even though there was a local shelter-in-
place order, putting employees at risk. Musk then announced that the company would work
on making ventilators for California and New York hospitals. One month later, Musk
tweeted that the lockdown was “fascist.” The next blow was just a few days later when
Musk posted that Tesla stock prices were too high, causing Tesla’s market value to decrease
by $14 billion. Musk’s tweets have proven to be detrimental to both Tesla’s reputation and
Tesla’s financial performance, showing a lack of regard for shareholder interest.

11. Corporate Social Responsibility at Tesla
• Tesla’s CSR strategy addresses stakeholders’ interests by monitoring and reporting on the
company’s product and operational impact, emphasizing consumer safety and responsible
sourcing, and focusing on its employees and building a strong organizational culture.

12. Question #1
• In what ways does Tesla address the
interests of its stakeholders through its
corporate social responsibility strategy?
QUESTION
 Tesla addresses the interests of its stakeholders
through its corporate social responsibility
strategy by focusing on sustainability and
reducing its environmental impact. This includes
producing electric vehicles that emit zero
emissions, investing in renewable energy
sources, and implementing sustainable
manufacturing practices. Additionally, Tesla
actively promotes and educates consumers on the
benefits of electric vehicles and clean energy.
ANSWER

13. Question #2
 What ethical issues has Tesla faced? What ethical issues is Tesla likely to face in the
future?
 Concerns about employee safety, allegations of discrimination and harassment, and
discussion about the company's use of autopilot technology are just a few of the ethical
issues Tesla has faced.
 The National Council for Occupational Safety and Health (NCOSH), which cited concerns
about worker safety and insufficient safety procedures at the company's plants, including
Tesla in its list of the "Dirty Dozen" of America's riskiest employers in 2018. Tesla has
also been accused of discrimination and harassment by a former employee who said that the
corporation disregarded her claims of harassment and discrimination based on her gender
and color.

14. Question #2
 What ethical issues has Tesla faced? What ethical issues is Tesla likely to face in the future?
 Tesla's use of autopilot technology, which has been linked to multiple accidents, has also
generated controversy. According to detractors, the company's promotion of the technology as
"autopilot" may lead to risky driving habits.
 Future ethical concerns for Tesla about its usage of artificial intelligence and the environmental
effects of its products are anticipated to arise. The business must address worries about the moral
ramifications of autonomous vehicles, the likelihood of accidents, and other safety issues as it
develops self-driving technology.
 The company will also need to address concerns about the environmental impact of its products,
including the production and disposal of batteries and other components. Tesla has already faced
criticism over the environmental impact of battery production, and the company will need to continue
to invest in sustainable practices and technologies to address these concerns.

15. Question #3
 What environmental issues do Tesla products work to address?
 Tesla's products work to address several environmental issues, including climate change,
air pollution, and dependence on fossil fuels.
 By producing electric cars, Tesla aims to reduce the carbon emissions associated with
transportation, which are a major contributor to climate change. The company's vehicles
produce no emissions, which helps to reduce the carbon footprint of individual drivers and
contribute to global efforts to reduce greenhouse gas emissions.
 In addition, Tesla's products also address air pollution, which is a significant
environmental issue in many urban areas. Electric cars produce no tailpipe emissions,
which helps to improve air quality and reduce the negative health impacts of air pollution
on local communities

16. Thank You!