Musk Apology For Comments About Thai Cave Rescue Diver Resonates With Investors

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Musk’s Apology Placates Investors, Tesla Stock Price Essentially Unchanged

Admitting to a burst of anger, Tesla CEO Elon Musk has apologized for his part in social media sparring with a cave diver who was involved in the Thailand cave rescue of a youth football team and their coach. The Musk apology comes at a time in which Musk’s posts on Twitter sparked backlash from shareholders and Silicon Valley analysts, who called his behavior immature and an impediment to the car company’s success.

As this well-written article suggests, my words were spoken in anger after Mr. Unsworth said several untruths & suggested I engage in a sexual act with the mini-sub, which had been built as an act of kindness & according to specifications from the dive team leader.

— Elon Musk (@elonmusk) July 18, 2018

Musk found himself at the center of another media imbroglio after he labeled a Thai cave diver, Vernon Unsworth, a “pedo.” Musk’s explicit accusations were reportedly without solid foundation. His comments on Twitter became a public cat fight before Musk deleted the posts. Damage to Tesla’s reputation may have had already been done, however, and many investors responded immediately and with deep concern.

Investor Reactions Spark Musk Apology

James Anderson, a partner at Baillie Gifford, Tesla’s fourth-largest shareholder, told The Guardian in an email on Tuesday that the company saw “the end of carbon as essential” but was “frustrated that the real steps towards this are being overshadowed and undermined by this saga.” Anderson said he agreed with some of Musk’s past remarks calling out critical analysts, “but this is different. We are in contact with the company, and we are hopeful that it is being taken with due seriousness.” He said he would like to see “peace, quiet, and execution” at the all-electric car company.

If Musk’s behavior did not change, “it could have a dramatic negative impact on the company,” said Gene Munster, head of research at Loup Ventures, a venture capital firm. “It has to start with an apology.” In addition to losing the confidence of investors, Munster said, “the irony here is that their brand is word of mouth.” The scandals “could negatively impact demand and access to capital.”

Loup Ventures published an open letter to Musk on behalf of investors, saying the comments to Unsworth “crossed the line” and calling for an apology. “Over the last 6 months, there have been too many examples of concerning behavior that is shaking investor confidence,” the letter said.

Jing Zhao, who recently filed a shareholder proposal to remove Musk as chairman of the Tesla board and install an independent director, said the CEO was being unprofessional and that it was “not his business” to travel to Thailand and try to directly solve the rescue challenges. Zhao said he believed Musk originally had “good intentions,” but that “humanitarian rescues … are professional tasks so we should trust others with local community connections. He should focus on his profession,” Zhao said, adding that if Musk wanted to help these kinds of causes, he should have a separate charity organization. Zhao also said that this scandal offered further evidence that the company needed an independent chair: “He is not mature enough.”

The Saga that Both Inspired and Embarrassed Musk

On June 23, 2018, 12 boys went exploring in Thailand’s Chiang Rai province with their football coach and ended up trapped deep inside a cave underneath a mountain following flooding.

The team and their young coach were ready to celebrate a team member’s birthday, having often ventured deep into Tham Luang, sometimes as far as 8km, for initiation rites where they would write the names of new team members on a cave wall. The BBC describes them as being in high spirits; they explored into the cave with just their torches. They didn’t need much else — after all, they were only planning to be there for an hour.

The football team did not emerge until 2 weeks later.

Rescue attempts were initially stymied by desperate cave conditions as well as the lack of diving training necessary for the youth to swim to safety in underground shafts. Compelled by the situation, Musk flew to Thailand and offered to assist by providing a “mini-submarine.” He and a team of engineers from SpaceX and The Boring Company brought over the vessel — a cylinder made out of the liquid oxygen transfer tube of a Falcon rocket. In Thailand, Musk also met with government officials there about the possibility of using it to help.

But Narongsak Osottanakorn, head of the command center during the rescue, did not welcome the idea, saying the sub was “technologically sophisticated” but “not practical” with the rescue mission. Musk then hit out at reports referring to Osottanakorn as “rescue chief,” noting that he was the former provincial governor of Chiang Rai and not the “subject matter expert.” Osottanakorn stepped down from his role to join the initiative. Musk shared email communications he had with a top member of the rescue team, in which he was told to keep working on the mini-sub because they might need it.

Ultimately, frustrated by many criticisms of his effort to help, and perhaps from being rejected and hurt that his offer was dismissed as not a good match for the situation at hand, Musk reacted to a subsequent comment by Unsworth, a 63-year-old British diver who called the project a “PR stunt.” He added that the billionaire could “stick his submarine where it hurts.”

Musk responded by promising to create a video proving his “mini-sub” would have worked, adding: “Sorry pedo guy, you really did ask for it.”

The diver, who was still at the cave site assisting with clean-up, told The Guardian he was “astonished and very angry” and was considering legal action.

The media firestorm that resulted from the accusation prompted the Musk apology. Musk felt validated in his original defense. “Nonetheless, his actions against me do not justify my actions against him, and for that I apologize to Mr. Unsworth and to the companies I represent as leader,” Musk said. “The fault is mine and mine alone.”

The Musk apology also referred to a “well-written article” by Jeremy Arnold, whose essential argument is as follows:

Musk is “a wealthy problem-solver with a long history of responding to charity requests on Twitter is asked to see what he can do to help. He agrees, opens dialogue for ideas, takes them to the on-the-ground experts for feedback, then sends some of his best engineers to work pro bono on practical mechanics.”

Shares of Tesla barely moved in after-hours trade on Tuesday, down about a 10th of a percent. The stock price ended approximately where it started today, Wednesday. Overall, the price is a bit higher than it was one week ago.