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TESLA: Under Fire from the Press and Regulatory Bodies

Monday, Nov. 25, 2013

Tesla, the manufacturer of high-end luxury electric cars, is under intense media and regulatory scrutiny as three incidents have surfaced of the lithium ion battery within Tesla’s Model S catching fire after a collision. In each case, the battery, which is located beneath the passenger cabin, ignited after the undercarriage was struck in the collision by a concrete wall, curved part of a truck, and a trailer hitch, respectively. Tesla rightly says no one was injured due to the fires, as the onboard computer warned each driver to exit the vehicle, and its CEO, Elon Musk, has been very vocal about the rate of battery fires for the Tesla Model S being much lower than that of conventional cars. As with any emerging technology, safety issues are paramount to public trust, as demonstrated by the temporary grounding of the new Boeing 787 aircraft over the safety of its lithium ion batteries. Tesla is facing at least three alternative actions: strengthening the undercarriage, thereby increasing the weight of the car and reducing performance; investing heavily in attempts to preempt the lithium ion battery’s tendency to catch fire; or doing nothing, continuing to point out that the fire risk is very small and is not a substantial safety risk to drivers. What role does ethical deliberation play in this decision? What should Tesla do?

  Kirk: As with any manufacturer of consumer products, Tesla’s ethical obligation is to have a deliberate and sustained commitment to the continual improvement of the safety of its products. But in business ethics, there is no such thing as an ethical decision that is insulated from the pressure of profits, losses, and incentives that often dictate behavior in the business world. Tesla’s current dilemma will force their executive team to make some tough decisions in addressing the tension between performance and cost efficiency on one hand, and safety on the other. Regardless of the balance that Tesla strikes, in addition to complying with automobile safety regulations, it is on them to openly convey the thinking behind these decisions, and to take into account the wishes of their customer base in their deliberation.

  Patrick: I think the media is overhyping the Tesla fires, but it’s no surprise. With the celebrity of its CEO, the Consumer Reports records set by the Model S, and the general novelty of the company, Tesla is a journalist’s go-to option for peaking their audience’s attention. Sometimes you have to take the good with the bad. As for Tesla’s next move, it largely depends on the findings of the National Highway and Transportation Safety Administration’s investigation. Up until this point, Tesla has increased the warranty to cover any incident of battery fire, even if caused by driver error; has increased the speed in which the Model S lowers itself 1 inch for aerodynamic purposes; and has put its effort into countering false claims about the Model S. For now, I think Tesla is in the clear.

U.S. Safety Agency Launches Investigation Into Tesla Fires (WSJ)

A Framework for Thinking Ethically (Markkula Center for Applied Ethics)



Comments Comments

Brendan said on Dec 6, 2013
Regarding Kirk's quote above "Tesla?s ethical obligation is to have a deliberate and sustained commitment to the continual improvement of the safety of its products", continual improvement is a business philosophy, even regards to safety, not an ethical obligation. Product safety is an ethical obligation. If the safety of the existing system is adequate, there is no ethical obligation to continue to invest resources in improvements in that area unless those improvements are enhancing other business goals. - Like - 3 people like this.
Patrick Coutermarsh said on Dec 6, 2013

Brendan, thanks for the post. I'm sympathetic to your view about continual improvement, but here are some things that came to mind for me. First, I'd call the continual improvement of a product's safety a "moral good," so the question becomes do corporations have an obligation to increase it. Under a stakeholder theory approach, I think it's reasonable to say that increased safety is a clear gain of value for the customer, which, in the long run, places it in the corporation's interest to maximize it. I think this makes it more than just a business philosophy that individual corporations can opt-in or out of. The second point that came to mind is over the notion of "adequate safety." It's my take that the notion of adequate safety is not an absolute, but rather a concept that is dependent on a number of factors: economic, legal, social, ethical, and the like. Looking back at the history of consumer products or services, whether it is air travel, medical procedures, or even cigarettes (e.g. the electronic ones), the trajectory of safety standards is clear--they are continually improving or compelling corporations to improve. I'd say it's an ethical obligation for corporations to keep up. - Patrick

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