Walmart Sues Elon Musk's Tesla After Solar Panels Catch Fire In Seven Stores

Retail giant Walmart has dragged Elon Musk’s Tesla Solar Systems to court alleging Tesla’s solar panels installed atop seven of its stores caused multiple fires.

The petition sought damages and immediate removal of solar panels installed by Tesla in the 240 Walmart locations.

Filed in the state of New York, the complaint said: “As of November 2018, no fewer than seven Walmart stores had experienced fires due to Tesla’s solar systems - including the four fires described above and three others that had occurred earlier.”

The filing also provided details related to evacuations, damage to property and the store inventory.

According to the lawsuit, the affected Walmart stores were in Denton, Maryland, Beavercreek, and Ohio.

Walmart alleged that Tesla failed to ground its solar and electrical systems properly and the solar panels had many visible defects.

Flaying Tesla for its poor safety procedures and ill-trained personnel, the lawsuit by Walmart accused Tesla of breach of contract, gross negligence and failure to satisfy industry standards.

Controversial acquisition and business reversal

Tesla acquired SolarCity in 2016 for around $2.6 billion amidst criticism that it was a deviation from its core business.

SolarCity was founded by Musk’s relatives, Peter, and Lyndon Rive. He also had a substantial share in the company.

Tesla’s strategy to offer solar panels and home battery storage systems through its offline retail stores and online facilities backfired. The plan did not sync with SolarCity's original vision of making rooftop solar accessible to all.

In an investor presentation, Musk had shown off sleek, glass solar roof tiles looking like premium shingles as an innovation that is going to replace conventional bulky panels. But Tesla’s offer of supplying innovative lightweight solar roof tiles did not translate into meaningful volumes.

All these led to a sharp reversal in the business of solar panel sales under Tesla. In late 2018, Tesla slashed prices on the residential solar systems. Still, no uptick happened.

For Tesla, now trying hard to expand the solar business, the lawsuit from a big brand like Walmart is a jolt. The Walmart news will be damaging when its solar panel business is already in a sluggish phase.

In the second quarter, it just installed a meager 29MW of solar capacity unlike the heydays of Solar City when it used to do more than 200MW of business in a single quarter.

Interestingly, the legal petition has come a day after CEO Elon Musk announced that six states will offer Tesla’s residential, solar rooftop systems on rent without a contract for as little as $50 a month.

At the vehicles' business too, Tesla is facing a fire investigation from the U.S. National Transportation Safety Board on complaints that several Model X and Model S cars burst into flames. Meanwhile, the release of Tesla Roadster is keenly awaited in the auto market.

In July, Tesla had reported a $408m loss in the second quarter despite selling more cars.

The latest Tesla news is that Tesla stock fell more than one percent after the Walmart lawsuit issue.