Tesla is best known for producing electric cars but many people don’t realize that the company also owns a solar panel manufacturing company. This week, Tesla’s solar business hit a major snag after Walmart filed suit against the company.
According to a recent court filing, solar panels that Tesla installed in seven different Walmart stores caught fire. Walmart claims the solar panels were improperly installed and had dozens of hazards, including faulty and loose wiring.
The court papers said that the workers who installed the solar panels showed “utter incompetence or callousness, or both.” Walmart is requesting that the company remove its solar panels from over 240 stores and pay the company for all the damages it incurred.
Walmart claims “gross negligence” on Tesla’s part
Tesla is no stranger to controversy and its solar business has been a hot button topic right from the start. Tesla initially acquired SolarCity for $2.6 billion in 2016, though Musk was already a major shareholder in the company.
Previously, SolarCity was drowning in debt and its shares were tanking so many people viewed the merger as a sort of bailout for the company. Only the merger didn’t fix the problems at SolarCity. In fact, quarterly installations have gone down by 85% since the deal went through.
Walmart became a SolarCity customer in 2010 in an attempt to lower energy costs and become a more environmentally friendly company. However, the solar panels are now de-energized.
Walmart claims that when Tesla acquired SolarCity, it failed to address the company’s faulty business practices. The lawsuit alleges that SolarCity employees are improperly trained, don’t know how to correctly install solar equipment, and fail to implement regular maintenance protocols.
What’s next for Tesla?
The court filing comes at an inopportune time for Tesla since the company has been making an effort to reboot its solar business. On Sunday, Elon Musk tweeted that the company will begin giving customers the option to rent solar panels without a long-term contract. The offer is available in six different states, though it’s unlikely Tesla will be getting a lot of takers at this point.
Tesla’s stock has struggled over the past year and is currently down more than 30% year to date. However, the company’s shares didn’t take too much of a hit after news of the lawsuit broke.
The stock dropped 1% but rebounded within a couple of days. SolarCity only accounts for about 5% of Tesla’s total revenue so investors may not be concerned about the impact the lawsuit will have on the company.