Business Ethics in the Automobile Industry: A Case Study of Tesla

This report analyzes the ethical issues faced by the automobile industry, with a focus on Tesla. It discusses industry regulations, ethical controversies faced by Tesla, and recommendations for improvement. The report emphasizes the need for stricter regulations to protect consumers, their security, privacy, and the environment.

BUSINESS ETHICS

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1) Choose of specific industry.....................................................................................................1
2) Identifying and describing main ethical issues facing industry .............................................2
3)Industry regulations.................................................................................................................3
4) Choose of organisation and describing ethical controversy it has faced. ..............................4
5)Does the industry require stricter regulations..........................................................................5
6) Recommendations ..................................................................................................................5
CONCLUSION................................................................................................................................6
References:.......................................................................................................................................7

INTRODUCTION
The business ethics is a form applied ethics which examines ethical principles and moral
that are arising in business environment. This is applied to all aspects of business conduct which
is relevant for individual and entire organisations. The business ethics is defined as implementing
appropriate business policies and practices. It ensures certain level of trust between existing
consumers and various forms of market participants (Adiguzel, 2021). Acting ethically helps in
determining what is right or wrong. It has significant influence on the corporate world and deals
with study of how business should behave in the face of ethical dilemmas and controversial
situations. The business ethics is leverage by many business for not only to remain clear from
legal perspective but also for boosting public image. The report is based on the Automobile
industry of Tesla which covers the main ethical issues, regulations of industry. Further, ethical
controversy is described faced by the company and recommendations are provided.
MAIN BODY
1) Choose of specific industry
The chosen industry is Auto mobile industry which covers a wide range of companies
and organisations that are involved in designing, development, manufacturing, marketing and
selling of motor vehicles. This term, was proposed by Elmer Sperry and came into use with
automobiles in 1989. The auto-mobile industry is the larger industry in revenue. It is a business
of manufacturing and merchandising of self-powered vehicles, involving passengers, farm
equipments, and other commercial vehicles. The automobile industry has encouraged the
development of extensive road system by allowing consumers to commute long distances for
work, shopping and entertainment (Ciulla, 2020). It has also played an major role in growth of
ancillary business. It had made key determinant of economic growth by employing large number
of people. In the United States, almost all manufacturers were assemblers who assembled
components and parts that were made by separate companies. The assembly technology also
offered itself as an advantageous financing method. The pioneering auto mobile manufacturer
not only had to solve the technical and financial problems of entering production, but also had to
make a fundamental decision about production.
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2) Identifying and describing main ethical issues facing industry
The business ethics are set of moral principles which controls the way of business acts.
The conception of ethical commitments and ethical Controversies are important in auto mobile
industry. There are ethical dilemmas in workplace. The behaviour of manager in auto mobile
industry has become an issue for the concern. The top management decisions impact the goals
and ethical behaviour of organisation. The industry faces several ethical issues-
 Environment impact- The global automobile industry is under constant pressure from
environmental and customer demands. This industry face the issues in respect to fuel
economy, gas emissions, safety and affordability (David, Mayes and Coppola, 2020).
There is high competitive pressure on cots, quality, manufacturing and performance of
vehicles. The current EU safety and economy regulations are affecting material selection
for automotive applications, specifically in vehicle mass and performance. The response
of automobile industry is primarily focused on selecting lightweight materials for
meeting performance, cost requirements and hence, improving efficiency and fuel
economy of vehicles.
 Fuel economy and CO2 emissions- It is an major issue faced by automotive industry in
the change of environment resulting from CO2 emissions. There is a produces of green
house gas emissions with CO2 emissions from transport sector. To direct influencing fuel
economy, Auto manufactures has been focused on light weighting for achieving
requirements of fuel efficiency.
 Automation- It is the most concerned ethical issue in auto mobile industry. It has served
in the terms of process efficiency and cost minimization of vehicles from perspective of
technology. The high level of automation leads to accidents and raises safety concerns.
 Privacy- This is also an ethical issues in respect to automation in the industry of
automobile. The user location is the key concern which questions to privacy issues in
automated vehicles as most of the user do not prefers to disclose their location which is
their ethical right. However, in the automobile industry the automation factor and GPS
tracking system withhold users from their right for keeping location private (Hummels,
2018).
 Security- The online approaches of data collection and its use in the production of
driverless cars can create ethical issues regarding the security of the personal data and
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information of users made available to the automotive industry. Driverless cars use cloud
data and cloud computing approaches to make them work. The cloud data is related to
data security which can be easily approached through cybercrime tactics for automobile
industry that is focusing the automation.
3)Industry regulations
The government regulations in auto mobile industry affects directly the way of looking
car, how its components are designed and overall performance of any given vehicle. The
government regulation puts an significant impact on automotive production costs while placing
limitations on how cars are sold and marketed. The law makers also made fuel efficiency a
higher priority in recent years (Hummels, 2018). The Corporate Average fuel economy sets
national standards for automotive fuel efficiency. Each country has own regulations which
implies that car companies should adapt their production standards for product distribution in
different markets. The government are imposing stringent environmental regulations for
controlling CO2 emissions on original equipment manufactures.
Type approval
In order to operate vehicle on public roads in UK, the vehicle needs to be registered and
type approved. The Vehicle Certification Agency, an executive agency of the Department for
Transport, is charged with issuing type approvals in the UK. There are two types of categories
approval- an EC type approval which is granted and accepted throughout he EU without needs of
vehicles for submitting further inspections. The national type approval is one which is suitable
for the cars that are imported or manufactured in low volumes and where manufactures intends
to use vehicles in UK.
Registration
The vehicles on the UK roads needs to be registered with the driver and vehicle licensing
agency and requires to hold a vehicle registration certificate (V5C). The person named on this is
responsible for keeping registered vehicle, number of registration and licensing obligations. In
the UK, it is impossible to register a vehicle without type approval or to be licensed by a person.
As this certificate is not valid as proof of ownership, as the owner and registered person are not
always the same (Khan and Naguib, 2019).
Insurance
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The UK has compulsory motor insurance regime under current legislation where a person
using vehicle needs to have insurance covering against third-part damage. This law completely
violates European law, which generally insures vehicles and not individuals. A law on automated
and electric vehicles was recently passed by the UK government. This bill contains new
insurance measures related to advanced vehicle technology. According to this bill, a person who
suffers damage in an accident can make claims against the insurance company.
Safety and environmental regulations
The UK implements the EU type approval directive 2007/46 for approval regulations by
(Road vehicles regulations 2009). The regulation 715/2007 is related to emissions and 661/2009
is related to safety which is directly applicable in UK. This regulations prescribes series of
technical standards for passenger vehicle and its components parts (Mees, 2019). Once a vehicle
has been approved for use on public roads in the UK, drivers will have to comply with various
vehicle safety regulations to ensure that the vehicle is operated in a manner that poses no danger
to the general public.
4) Choose of organisation and describing ethical controversy it has faced.
The chosen organisation is Tesla. It is a public limited company which is an American
electric vehicle and clean energy company based in Austin, Texas, United states. The Tesla deals
in designing and manufacturing electric cars, battery energy storage from home to solar panels
and solar roof tiles with related products and services. It is one of the most valuable company
and auto maker in the world. The company was established in 2003 by Martin Eberhard and
Marc Tarpenning as Tesla motors. The company has sales of battery electric vehicles and plug-in
electric vehicles capturing 16% of plug-in market and 23% of batter electric market. It is
operated in 598 retail stores, service centres and galleries around the world and the areas in
which the company offers its services are North America, Europe, East Asia, West Asia, and
Oceania (Michalos, 2017). Tesla's global vehicle sales were 499,550 units in 2020, a 35.8%
increase over the previous year. In October 2021, Tesla's market capitalization reached US$1
trillion. The Elon Musk is the CEO of Tesla. In 2020, the company installed one of the largest
battery energy storage systems with around 3 gigawatt hours. The total revenue the company
generated in 2020 is approximately $ 31.5 billion around the world and this company provides
approximately 70,757 jobs.
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Tesla is defending itself in U.S. and Germany against the allegations that it has violated
the rules and regulations of environment according to new financial filing. The environmental
protection agency in the U.S. Accused Tesla last week of failing to prove it in compliance with
federal emissions standards for hazardous air pollutants. It had non-compliance relating to air
quality permitting at Tesla Fremont factory. The most recent ethical controversy that Tesla Inc.
has faced is the termination of its employees due to the Covid-19 pandemic. Company CEO and
co-founder Elon Musk promised employees that if they felt uncomfortable entering the office,
they could stay home. The company's management also said they would not be penalized and
terminated for failing to come to work (Okumus and et.al., 2019). The company's CEO writes
and emails his factory worker, if at this point you are uncomfortable going back to work please
do not feel obliged to. In May, the two Tesla employees received a letter of resignation from the
company's HR department because work will not be resumed. Both give their manager a reason
to stay home but are ultimately fired from the company. In the second week of May, the
company starts its production functions. However, most employees said the company was unable
to follow the correct guidelines of the Covid-19 developed by the nation's government. The
company does not follow guidelines on social distancing, machine and employee hygiene, and
does not adhere to the rules related to the mask and proper hygiene. For this reason, new cases of
infection have also occurred in the company. Around 10,000 employees were reported positive
for Covid at the plant. The regulations in the industry helps in improving efficiency and tasks are
completed quickly by offering quality product and services for having better customer
experience (Orlitzky, 2017). The business needs to ensure that staff is familiar with legal
framework in which it is operating and respecting the need for regulatory compliance. The
regulations in auto mobile industry ensures for operating to certain standards by involving safety
and quality.
5)Does the industry require stricter regulations
The Tesla is required to follow the stricter rules and regulations for the safety of the
employees, customers. The regulation in the industry are important for protecting consumers
rights and safety. The minimum standards for the product and service are ensured. The strict
regulations helps in protecting the environment. From the above analysis the issues faced by the
auto mobile industry requires strict regulation for the maintenance of data collection privacy and
security (Provis, 2017).
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6) Recommendations
The Tesla is recommended to improve its multinational presence by providing new
facilities and sales operations in high potential developing countries for enhancement of business
growth. It can also make significant investments in research and development for the production
of technology advanced products that are competitive. The laws, regulations and codes cover a
wide range of practices in the automotive industry, from the manufacture of the cars to the
automotive sales and service facilities (Purwanto And et.al., 2019). The various automotive
industry practices are Code of Conduct must follow by Tesla include type-approval, registration,
insurance, development, manufacture and supply, sales, mergers, acquisitions and joint ventures,
incentives and barriers to entry. The Tesla is recommended to follow the chain of command by
enforcing the communication. The recommendation is provided for the reduction of custom duty
on all alloy steel and secondary aluminium alloy items (Rauf, 2021). The automotive gave
people more personal freedom and access to jobs and services. It led to the development of better
roads and modes of transport. Industries and new jobs emerged to meet demand for auto parts
and fuels.
CONCLUSION
A company is a collection of different companies. Ethics is the question of right, wrong,
fairness and justice. Hence, business ethics focuses on ethical issues that arise in the business
world. As the focus on auto emissions that affect air quality increases, so does the demand for
green cars, especially electric and hybrid vehicles, and as such, registrations of alternative fuel
vehicles have increased. The auto mobile industry is key driver in economy which plays an
important role for the development of industries and other industries gets supports for the
procurement of raw materials, from basic industries such as steel, metal, glass and many more. In
the report ethical issues is been analysed that is faced by the auto mobile industry and Tesla face
controversy issues. In the industry there is need to follow of strict regulations for the protection
of consumers their security privacy and environment.
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References:
Books and Journals
Adiguzel, Z., 2021. Evaluation and Importance of Business Ethics in Terms of Organizational
Culture. In Multidisciplinary Approaches to Ethics in the Digital Era (pp. 248-275). IGI
Global.
Ciulla, J.B., 2020. The Search for Ethics in Leadership, Business, and Beyond. Springer.
David, A., Mayes, A.S. and Coppola, E.C., 2020. The Effect of Live Theatre on Business
Ethics. Humanistic Management Journal. 5(2). pp.215-230.
Hummels, H., 2018. Business ethics and the process of organizing: An interaction perspective.
In Human Action in Business (pp. 97-111). Routledge.
Khan, F.R. and Naguib, R., 2019. Epistemic healing: A critical ethical response to epistemic
violence in business ethics. Journal of Business Ethics. 156(1). pp.89-104.
Mees, B., 2019. The rise of business ethics. Routledge.
Michalos, A.C., 2017. Social Sciences and Business Ethics. In How Good Policies and Business
Ethics Enhance Good Quality of Life (pp. 1-4). Springer, Cham.
Okumus, F. and et.al., 2019. Business ethics and social responsibility. In Strategic management
for hospitality and tourism (pp. 41-51). Routledge.
Orlitzky, M., 2017. How cognitive neuroscience informs a subjectivist-evolutionary explanation
of business ethics. Journal of Business Ethics. 144(4). pp.717-732.
Provis, C., 2017. Intuition, analysis and reflection in business ethics. Journal of business
ethics. 140(1). pp.5-15.
Purwanto, R.M. And et.al., 2019. Study the importance of business ethics and ethical marketing
in digital era. Journal of Critical Reviews. 6(5). pp.150-154.
Rauf, A.A., 2021. New moralities for new media? Assessing the role of social media in acts of
terror and providing points of deliberation for business ethics. Journal of Business
Ethics. 170(2). pp.229-251.
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