Ethical pile-ups in the modern Motor Industry

Ethical pile-ups in the modern Motor Industry

Automakers are no strangers to ethical concerns, but how well are the big players adapting to the new world order and what does the future hold?

Whether or not Elon Musk foresaw that the rise in his political influence with the second Trump presidency would equate to a fall in his popularity ratings, the resultant animus toward Tesla has resulted in protests and acts of vandalism against its cars, charging stations and dealerships despite the company’s notably green credentials. The corresponding slump in business metrics – including profitability (71%), share price (35%), and vehicle deliveries (13%) - is perhaps more of a surprise, until you remind yourself that the name Tesla has always been synonymous with Musk himself.

So the recently announced intention to 'significantly' scale back Musk's involvement in Trump's Department of Government Efficiency (DOGE), taken with recent gains in the Electric Vehicle (EV) market by competitors, might appear to suggest that Tesla is under financial pressure. The reality is that his advisors are sensibly acting on the negative publicity generated by the airing of Musk’s seeming and increasingly far right views.

In truth, recent news stories tell only half the tale. Tesla's market capitalisation should be no more than $500b, based on a generous multiple of 45 (being that applied to elite brands such as Ferrari and Hermès) and by reference to projected earnings of $11b for 2027. Yet as the latest data from financial analysts 'Resident Alpha' illustrates, the actual number comes in at a whopping $884b, with the additional $384b attributable to Musk and the multifaceted qualities and influences he brings to the table.

In short, the markets appear to view Tesla's current financial challenges as a temporary blip, whilst the controversy that frequently follows its founder appears to have been 'priced in'. So it would seem that when it comes to Musk's unique cult of personality and for now at least, the usual rules of car making, ethics and internal governance don't apply.

Even Tesla must heed the way the wind blows in terms of public opinion, however. The Wolfsberg behemoth Volkswagen found itself under significant pressure in 2021 after investing in a manufacturing plant in the Chinese region of Xinjiang, where socalled 're-education' camps for over a million ethnic minority Uyghurs had been established. By late 2024 and despite an internal report finding no evidence that local workers had suffered abuse, criticism from human rights groups and Western lawmakers persisted, along with allegations of 'value-washing', leading the company to cut its losses and sell the entire plant to the Shanghai government, together with two nearby test tracks.

Unfortunately for VW this crisis came hot on the heels of the Dieselgate scandal, when the automaker was caught installing software allowing its vehicles to cheat emission tests. The outcome has thus far involved fines of over $33b, numerous recalls and multiple criminal and civil lawsuits, with the final payout some way from being known.

To add insult to injury, VW also experienced a data breach in December 2024, accidentally exposing the sensitive data of some 800,000 customers across its various electric brands including Audi, Seat and Skoda. This came to light as a result of work undertaken by the Chaos Computer Club, a wellknown collective of ‘ethical hackers’. VW is bracing itself for yet further and resultant litigation.

Tesla on the other hand, received praise from the Las Vegas Police Department in the same month for providing data relating to the Tesla Cybertruck that was blown up outside the Trump International Hotel on New Years Day. The company was able to map the route taken by the driver, who shot himself in the head moments before detonating the explosion, by utilising information collected as the vehicle paused at charging stations. Unlike Apple, Tesla's terms and conditions allow it to share all manner of information with the authorities when required.

And as for the future? Look East. Chinese EV sales rose by 14% in the UK last year, with manufacturers such as BYD, MG and Geely leading the charge; a figure expected to rise to 25% by 2030 when new petrol and diesel car sales will be banned in the UK in the push towards net zero. Thus the UK EV market is now being driven by affordability for the masses fuelled by cheap Chinese labour, materials and dramatic government subsidies.

And there sits the conundrum. EV batteries require cobalt, copper, lithium and nickel amongst other raw materials, and that has led to the rapid expansion of mines resulting in human rights abuses and environmental harm not just in China but all over the world. This disconnect with traditional green policy was illustrated in a recent report by Amnesty International, which found that most EV makers aren’t sufficiently demonstrating that they’re meeting International human rights standards, or even putting their own policies into action.

Until relatively recently, the EV market was all about high earning consumers flaunting their green credentials in Tesla's latest cool creation. But in a warming world where mass ownership of EVs is becoming imperative, it’s far from clear where the next generation of planet conscious EV buyers will find their ethical home. Currently, they have a dilemma on their hands. 

Joel Leigh is the motoring correspondent of City Solicitor and a Partner at Howard Kennedy LLP