A group of mostly Democratic senators pressured Tesla CEO Elon Musk to end the company’s use of forced arbitration clauses in employee and customer contracts, in a letter on Monday.
Like most large companies, Tesla requires workers to sign an arbitration agreement upon employment wherever it is legal to do so. That means to speak freely in court, where their speech will become part of a public record, workers need to get an exemption from the arbitration agreement from a judge first.
The senators wrote that such clauses have allowed workers’ complaints of racist discrimination and other bad working conditions to remain hidden from public view. The group included Sens. Richard Blumenthal, D-Conn., Sherrod Brown, D-Ohio, Dick Durbin, D-Ill., Ed Markey, D-Mass., Jeff Merkley, D-Ore., Bernie Sanders, I-Vt. and Elizabeth Warren, D-Mass.
The letter references details from discrimination lawsuits against Tesla, in which Black workers said they regularly faced racist discrimination at work, and women who worked at Tesla reported blatant objectification and harassment by male co-workers, with little to no support from management. The EEOC, a federal agency responsible for enforcing civil rights laws against workplace discrimination, has previously issued a cause finding against Tesla, the company disclosed in June last year.
The senators wrote that workers at Tesla’s Fremont, Calif. factory seem to have brought at least five times as many discrimination lawsuits last year than workers at comparable plants run by other companies.
“Only a few of these cases, however, have managed to survive in court, with most being forced out of court following Tesla’s motions to compel arbitration,” the lawmakers wrote. “The details these cases allege – some of which we noted above – raise significant concerns about not only Tesla management’s complicity and participation in the discriminatory conditions, but also the untold number of other complaints that remain confidential.”
Forced arbitration clauses in consumer contracts have similarly obscured important details about Tesla’s vehicle safety and business practices from the public, the lawmakers wrote.
“The public deserves the full record of safety complaints about Tesla vehicles,” they said, adding that while clauses in customer contracts can theoretically let customers opt out of forced arbitration, they rarely do so, making the difference basically moot.
Of particular concern to the senators were consumer complaints of phantom braking that occurred in Tesla vehicles.
“Beyond flawed design choices, Tesla’s vehicles appear to be plagued by myriad hardware and software issues: steering wheels in two Tesla vehicles fell off during operation because of a missing retaining bolt, which NHTSA recently opened an investigation into, while another vehicle appeared to spontaneously combust,” they wrote. “But because Tesla drivers, as a practical reality, are subject to confidential arbitration agreements, we and the public – including would-be buyers – have no visibility into what complaints may have already been made and what other potential safety issues with Tesla vehicles may exist.”
Beyond asking Tesla to commit to ending arbitration clauses in employee and consumer contracts and to stop filing motions to compel arbitration in court, the lawmakers asked Tesla for detailed information on its arbitration practices.
For example, senators asked how many racial harassment, discrimination and retaliation complaints Tesla received from workers since 2012 and how many were settled or went to arbitration. They asked for the same details about sexual harassment complaints from Tesla workers.
They also asked for more information on when Tesla added the ability for consumers to opt-out of forced arbitration, and how many had actually been able to do so historically.
The senators also sought detailed information on the types of vehicle related complaints they received from customers, which hardware and software factored into those complaints, how many were settled prior to arbitration and how many that went to arbitration were found in favor of the consumer.
Mandatory arbitration is a common practice among new- and used-car dealerships, says Paul Bland, executive director at Public Justice, the consumer advocacy group. However, Tesla makes and sells its cars direct to consumers so its forced arbitration clauses cover more than the norm where auto sales are concerned.
Bland said, “It makes a lot of sense to me that senators would focus on this. Tesla uses arbitration clauses as a tactic to shunt people into a forum that’s pretty rigged for the corporation.”
The long-time consumer advocate views arbitration as a secretive system that makes it harder for consumers to find out what happened to people in previous related cases. Bland also said arbitration makes it harder for consumers to form class action lawsuits, or even to make informed choices about where they want to take their business.
Apple is losing market share in China due to declining iPhone shipments, supply chain analyst Ming-Chi Kuo wrote in a report on Friday. The stock slid 2.4%.
“Apple has adopted a cautious stance when discussing 2025 iPhone production plans with key suppliers,” Kuo, an analyst at TF Securities, wrote in the post. He added that despite the expected launch of the new iPhone SE 4, shipments are expected to decline 6% year over year for the first half of 2025.
Kuo expects Apple’s market share to continue to slide, as two of the coming iPhones are so thin that they likely will only support eSIM, which the Chinese market currently does not promote.
“These two models could face shipping momentum challenges unless their design is modified,” he wrote.
Kuo wrote that in December, overall smartphone shipments in China were flat from a year earlier, but iPhone shipments dropped 10% to 12%.
There is also “no evidence” that Apple Intelligence, the company’s on-device artificial intelligence offering, is driving hardware upgrades or services revenue, according to Kuo. He wrote that the feature “has not boosted iPhone replacement demand,” according to a supply chain survey he conducted, and added that in his view, the feature’s appeal “has significantly declined compared to cloud-based AI services, which have advanced rapidly in subsequent months.”
Apple’s estimated iPhone shipments total about 220 million units for 2024 and between about 220 million and 225 million for this year, Kuo wrote. That is “below the market consensus of 240 million or more,” he wrote.
Apple did not immediately respond to CNBC’s request for comment.
Amazon said it is halting some of its diversity and inclusion initiatives, joining a growing list of major corporations that have made similar moves in the face of increasing public and legal scrutiny.
In a Dec. 16 internal note to staffers that was obtained by CNBC, Candi Castleberry, Amazon’s VP of inclusive experiences and technology, said the company was in the process of “winding down outdated programs and materials” as part of a broader review of hundreds of initiatives.
“Rather than have individual groups build programs, we are focusing on programs with proven outcomes — and we also aim to foster a more truly inclusive culture,” Castleberry wrote in the note, which was first reported by Bloomberg.
Castleberry’s memo doesn’t say which programs the company is dropping as a result of its review. The company typically releases annual data on the racial and gender makeup of its workforce, and it also operates Black, LGBTQ+, indigenous and veteran employee resource groups, among others.
In 2020, Amazon set a goal of doubling the number of Black employees in vice president and director roles. It announced the same goal in 2021 and also pledged to hire 30% more Black employees for product manager, engineer and other corporate roles.
Meta on Friday made a similar retreat from its diversity, equity and inclusion initiatives. The social media company said it’s ending its approach of considering qualified candidates from underrepresented groups for open roles and its equity and inclusion training programs. The decision drew backlash from Meta employees, including one staffer who wrote, “If you don’t stand by your principles when things get difficult, they aren’t values. They’re hobbies.”
Amazon, which is the nation’s second-largest private employer behind Walmart, also recently made changes to its “Our Positions” webpage, which lays out the company’s stance on a variety of policy issues. Previously, there were separate sections dedicated to “Equity for Black people,” “Diversity, equity and inclusion” and “LGBTQ+ rights,” according to records from the Internet Archive’s Wayback Machine.
The current webpage has streamlined those sections into a single paragraph. The section says that Amazon believes in creating a diverse and inclusive company and that inequitable treatment of anyone is unacceptable. The Information earlier reported the changes.
Amazon spokesperson Kelly Nantel told CNBC in a statement: “We update this page from time to time to ensure that it reflects updates we’ve made to various programs and positions.”
Read the full memo from Amazon’s Castleberry:
Team,
As we head toward the end of the year, I want to give another update on the work we’ve been doing around representation and inclusion.
As a large, global company that operates in different countries and industries, we serve hundreds of millions of customers from a range of backgrounds and globally diverse communities. To serve them effectively, we need millions of employees and partners that reflect our customers and communities. We strive to be representative of those customers and build a culture that’s inclusive for everyone.
In the last few years we took a new approach, reviewing hundreds of programs across the company, using science to evaluate their effectiveness, impact, and ROI — identifying the ones we believed should continue. Each one of these addresses a specific disparity, and is designed to end when that disparity is eliminated. In parallel, we worked to unify employee groups together under one umbrella, and build programs that are open to all. Rather than have individual groups build programs, we are focusing on programs with proven outcomes — and we also aim to foster a more truly inclusive culture. You can read more about this on our Together at Amazon page on A to Z.
This approach — where we move away from programs that were separate from our existing processes, and instead integrating our work into existing processes so they become durable — is the evolution to “built in” and “born inclusive,” instead of “bolted on.” As part of this evolution, we’ve been winding down outdated programs and materials, and we’re aiming to complete that by the end of 2024. We also know there will always be individuals or teams who continue to do well-intentioned things that don’t align with our company-wide approach, and we might not always see those right away. But we’ll keep at it.
We’ll continue to share ongoing updates, and appreciate your hard work in driving this progress. We believe this is important work, so we’ll keep investing in programs that help us reflect those audiences, help employees grow, thrive, and connect, and we remain dedicated to delivering inclusive experiences for customers, employees, and communities around the world.
New Tesla Model 3 vehicles on a truck at a logistics drop zone in Seattle, Washington, on Aug. 22, 2024.
M. Scott Brauer | Bloomberg | Getty Images
Tesla is voluntarily recalling about 239,000 of its electric vehicles in the U.S. to fix an issue that can cause its rearview cameras to fail, the company disclosed in filings posted Friday to the National Highway Traffic Safety Administration’s website.
“A rearview camera that does not display an image reduces the driver’s rear view, increasing the risk of a crash,” Tesla wrote in a letter to the regulator. The recall applies to Tesla’s 2024-2025 Model 3 and Model S sedans, and to its 2023-2025 Model X and Model Y SUVs.
The company also said in the acknowledgement letter that it has already “released an over-the-air (OTA) software update, free of charge” that can fix some of the vehicles’ camera issues.
In 2024, Tesla issued 16 recalls in the U.S. that applied to 5.14 million of its EVs, according to NHTSA data. The recall remedies included a mix of over-the-air software updates and parts replacements. More than 40% of last year’s recalls pertained to issues with the newest vehicle in the company’s lineup, the Cybertruck, an angular steel pickup that Tesla began delivering to customers in late 2023.
Regarding the latest recall, the company said it had received 887 warranty claims and dozens of field reports but told the NHTSA that it was not aware of any injurious, fatal or other collisions resulting from the rearview camera failures.
Other customers with vehicles that “experienced a circuit board failure or stress that may lead to a circuit board failure,” which cause the backup camera failures, can have their vehicles’ computers replaced by Tesla, free of charge, the company said.
Tesla did not immediately respond to CNBC’s request for comment.