Walmart filed suit against Tesla in New York yesterday, alleging that the company's negligence installing rooftop solar panels has led to at least seven fires at Walmart stores since 2012. It's demanding that Tesla remove solar panels from more than 200 stores where they are still in place, and pay Walmart damages for the fires. It hasn't specified the size of those damages, but one of the fires led to a store being closed for eight days.

It's a lawsuit that could have been avoided, if Elon Musk weren't so reluctant to ever admit that he is wrong. Instead, when faced with obstacles or controversy, Musk tends to double down on whatever course of action he's chosen. 

At times, that strategy works very well for him, as when he kept pushing Tesla to inrease Model 3 production in the face of dire predictions from financial analysts. He wound up bringing the company to profitability and proving the naysayers wrong. At other times, that stubbornness makes a bad situation worse, as it did when he stood his ground against the Security and Exchange Commission over a single, strikingly ill-considered tweet. 

Of all the questionable decisions Musk has stubbornly stuck by in his management of Tesla, none has proved as controversial as the company's $2.3 billion purchase of SolarCity in 2016, a move which shareholders voted in, but which many derided as a bailout. They claimed that Musk, the largest shareholder in both SolarCity and Tesla, was using Tesla funds to avoid taking a huge loss on his SolarCity investment, as well as to help out its co-founders who happened to be his cousins. Some Tesla shareholders were so unhappy about the deal that they started a class-action lawsuit against Musk and the Tesla board for pushing it through. That lawsuit is proceeding, and Musk was scheduled to be deposed early this month.

Now, Walmart is  pointing to that same acquisition as the true source of its rooftop fires. "On information and belief, when Tesla purchased SolarCity to bail out the flailing company (whose executives included two of Tesla CEO Elon Musk's first cousins), Tesla failed to correct SolarCity's chaotic installation practices or to adopt adequate maintenance protocols, which would have been particularly important in light of the improper installation practices," Walmart's suit alleges. It accuses Tesla of "widespread, systemic negligence." It further alleges that Tesla sent out unqualified employees to handle installation and maintenance of the rooftop systems. In fact, it says these Tesla employees were so poorly trained that they were unable to identify cracks and high-temperature spots in the panels that Tesla owned and was supposed to be maintaining. As Walmart's filing drily notes: "​To state the obvious, properly designed, installed, inspected, and maintained solar systems do not spontaneously combust."

Walmart blames SolarCity's business model.

Walmart also says that problems and dangers remain unavoidable, so long as Tesla continues to pursue the original SolarCity business model. "On information and belief, Tesla's predecessor-in-interest-SolarCity had adopted an ill-considered business model that required it to install solar panel systems haphazardly and as quickly as possible in order to turn a profit, and the contractors and subcontractors who performed the original installation work had not been properly hired, trained, and supervised."

Perhaps the worst thing about this lawsuit is that it probably could have been avoided. Walmart has long been a Tesla supporter, and two years ago, the retailer even placed a pre-order for Tesla's self-driving trucks, even though no one knows when the first one might roll off the assembly line. When Walmart's investigation found that Tesla solar panels were the common denominator among its burning stores, it asked Tesla to take steps to address the problem, at least according to the lawsuit. Instead, it says that Tesla inspected solar installations and reported that problems were fixed when they weren't. "At best, the inspection reports overstate Tesla's efforts to repair solar system defects; At worst they contain misrepresentations about Tesla's remediation efforts."

And what was Musk doing during the months when Walmart identified Tesla's panels as the source of its fires and sought the company's help in finding and remediating their cause? You might think a prudent leader would suspend further installations until he could establish that the systems were safe. Instead, he doubled down as he so often does on his questionable decisions. This week, he announced a new rental program designed to get solar panels onto the roofs of millions of homes whose owners might not be able to afford to buy them. In this offer, Tesla will install rooftop solar panels and charge a monthly fee that could be as low as $50 plus tax, with no upfront installation costs. However, homeowners who no longer want the panels or who want to downgrade to a less costly version will have to pay $1,500 for their removal.

"With the new lower Tesla pricing, it's like having a money printer on your roof if you live a state with high electricity costs," Musk tweeted when he made the announcement on August 18. Two days later, Walmart filed its suit.

Update: After this article was published, Inc.com received this statement from a Tesla representative: "Walmart and Tesla look forward to addressing all issues and re-energizing Tesla solar installations at Walmart stores, once all parties are certain that all concerns have been addressed. Together, we look forward to pursuing our mutual goal of a sustainable energy future. Above all else, both companies want each and every system to operate reliably, efficiently, and safely."

Published on: Aug 21, 2019
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