from the funny-how-that-works dept
Coming from telecom, I’m painfully aware of the perils of the “deregulation is a panacea” mindset. For literally thirty straight years, the idea that deregulation results in some kind of miraculous Utopia informed U.S. telecom policy, resulting in a sector that was increasingly consolidated and uncompetitive. In short, the entirety of U.S. telecom policy (with the short lived sporadic exception) has been to kowtow to regional telecom monopolies. Efforts to do absolutely anything other than that (see: net neutrality, privacy, etc.) are met with immeasurable hyperventilation and predictions of imminent doom.
So I think the U.S. telecom sector holds some valuable lessons in terms of regulatory competency and accountability. No, you don’t want regulators that are heavy-handed incompetents. And yes, sometimes deregulation can help improve already competitive markets (which telecom most certainly isn’t). At the same time, you don’t want regulators who are mindless pushovers, where companies are keenly aware they face zero repercussions for actively harming consumers, public safety, or the health of a specific market.
Enter Tesla, which is finally facing something vaguely resembling regulatory scrutiny for its bungled and falsehood-filled deployment of “full self-driving” technology. As crashes and criticism pile up, Tesla is arguably facing its first ever instance of regulatory accountability in the face of more competent government hires and an ongoing investigation into the company’s claims by the NHTSA. This all might result in no meaningful or competent regulatory action, but the fact that people aren’t sure of that fact is still a notable sea change.
This, in turn, has automatically resulted in a new tone at Tesla that more reflects a company run by actual adults:
“Tesla held a regularly scheduled conference call to discuss its quarterly financial results, but ? as he?d previously teased ? Musk did not attend. His absence took what?s normally a venue for his rants and ramblings, dismissals of Wall Street, and attacks on the press and turned it into a coherent (if scripted) presentation of the company?s recent progress.
There were fewer sideshows and a more measured tone, though the executives who spoke in Musk?s place still made some contradictions. If Musk were to leave his post atop the company, it?s likely that Tesla would look and sound a lot like how the company was presented on Wednesday night?s call.
While Musk’s bravado appeals to fans of bravado, it’s not hard to argue his behavior has also actively harmed the companies he oversees. Unless folks genuinely think securities fraud or calling basic life-saving public health measures “fascism” are genuinely productive. Tesla has now shown a profit in nine straight quarters, or 11 of the last 13. But the company now faces not only marginally more competent regulatory oversight, but a flood of well-funded competitors and increased criticism of build quality. It’s not hard to think that Musk’s mouth could, at any moment, completely sabotage efforts to take Tesla to the next level.
Still, I tend to come back to the idea of basic regulatory competency. Even if regulators aren’t going to always take action, they need to give the impression that they actively could at any moment. The threat of regulatory repercussion is sometimes as useful as regulation itself. During the Trump era (again, see telecom) and the Obama era (see: Google) the message sent was pretty clear: you can do pretty much whatever you like with little to no meaningful accountability as long as you’re moderately clever about it. That included running a sloppy open beta of 3,500 pound self-driving automobiles on public streets without public consent or much in the way of safety precautions (see: Uber’s Arizona fatality).
This free for all is likely poised to change, and it seems like Tesla might more easily navigate the coming rocky waters and sensitive legal and regulatory skirmishes with a CEO who isn’t prone toward absolute chaos. While Musk’s behavior is certainly tied to the company’s disruptive brand, it is possible to have executives who are performatively chaotic and disruptive (see: ex-T-Mobile CEO John Legere) without actively shooting the company in the foot every other time they open their mouths.