Elon Musk: When to Negotiate

Elon Musk: When to Negotiate

How do you know when to enter a negotiation? 

During the COVID-19 outbreak, the State of California Governor Gavin Newsom, and officials from the Alameda County, made the decision to shut down non-essential businesses, which included suspending production at the Tesla car plant from 23 March 2020.

In response, the CEO of Tesla Corporation, Elon Musk, said on Twitter, “Frankly, this is the final straw. Tesla will now move its HQ and future programs to Texas/Nevada immediately. If we even retain Fremont manufacturing activity at all, it will be dependent on how Tesla is treated in the future. Tesla is the last carmaker left in CA.”. As a tactical move in helping in his aim of reopening the car plant, Musk also announced, “Tesla is filing a lawsuit against Alameda County immediately. The unelected & ignorant “Interim Health Officer” of Alameda is acting contrary to the Governor, the President, our Constitutional freedoms & just plain common sense!”.

After deciding that the manufacturing facility must stay open, it is likely that Elon Musk considered at least three major issues prior to starting negotiations with the State of California.

Firstly, Musk considered the future alternatives that both Tesla and the State of California had without each other, and who was more dependent on the other. If the actions of Musk are any indication, his assessment showed that the State of California was in a weaker negotiating position, with more to lose if Tesla relocated, and would, as a result, be more likely to give concessions. This was because of the loss of livelihoods for thousands of Californian workers, and because the state of Texas would most likely offer inducements for Tesla to move.

Secondly, by stating that the plant would move to Texas, Musk deliberately set out to create a mindset of urgency and uncertainty that would unite the affected workers and the broader community to pressure government officials to overturn the plant’s closure.

Thirdly, Musk tried to legitimise the Tesla position to reopen the plant by initiating legal action against the County of Alameda. With public pressure, and the prospect of a costly legal case, officials from the County of Alameda became increasingly motivated to reach a negotiated settlement.

On 12 May 2020, Government officials went on to approve the reopening of the Tesla plant and Tesla dropped its lawsuit against the County of Alameda. Whether Musk enhanced his reputation as either a patriot, or a businessperson, is debatable. What Musk did demonstrate is that he carefully considered when you should enter a negotiation!

Quick tips –Managing Renegotiations

  • Shape the negotiation process before you negotiate the substantive issues
  • If your dependence on the other party is high, consider delaying the negotiations to strengthen the alternatives you could exercise with others
  • Prior to entering the negotiations, look for opportunities to create mindsets of advocacy with important stakeholders 

Archive  

Avoiding Buyer's Remorse: Knowing when to close

Breaking deadlocks: AFL resolves stalemate

Changing Perceptions: Shane Warne recalls advice

Collaborating to create value: Power to the people

Creating points of influence: Russell Crowe gets his leading lady

Creating strong alternatives: Flying fresh milk to China

Cultural mindsets: SONY Walkman designed for harmony

Defining Fairness: US German trade negotiations

Difficult conversations: Thalidomide sufferers seek empathy

Elon Musk: When to Negotiate

Engaging the enemy: US and Taliban peace talks

Finding common ground: US Firearm reforms

Gun tragedies: We hear you

Hostage negotiations: A frontline perspective

Identity needs: Tobacco now a nobody

In Focus: Negotiating with agents

In Focus: The authentic negotiator

Influencing timelines: The brave new world of regulators

Leadership without authority: Reducing domestic violence

Managing COVID-19 Renegotiations

Managing uncertainty: New freeway gets a red light

Mindsets: It’s a choice!

Negotiation preparation: Prime Minster wins election

Negotiation styles: Managing aggressive behaviours

Price haggling: Strategies to position value

Problem Solving: Calm in the cockpit

Problem Solving: Delivering outcomes

Restoring relationships: Saying sorry

Setting the scene: Automotive executives fly into a storm

Shaping mindsets: AVIS We try harder

Taylor Swift: Giving others a voice

The power of language: A statement or a question?

Timing concessions: Bangladesh factory tragedy

Traits of skilled negotiators: Nelson Mandela

Verifying trust: World soccer cup and gulf of Mexico oil spill


Topics