In 2018, no fewer than seven Walmarts across the country spontaneously caught fire due to malfunctioning solar panels. The fires caused millions of dollars in property damage and, in some cases, led to the extended closure of the affected stores.
Now, Walmart is going after Tesla Inc., holding the tech company responsible for the damages.
In a complaint filed with the New York state court on Tuesday, the retail giant has announced that it is suing Tesla for breach of contract, negligence, and failure to uphold industry standards.
According to the filing, Tesla has been “engaged in widespread, systemic negligence and had failed to abide by prudent industry practices in installing, operating and maintaining its solar systems.”
Since details of the filing were made public, the stock market has taken notice, and it likely couldn’t have come at a worse time for Tesla.
The first fire occurred in an Ohio store in March of 2018, according to a statement from Walmart. Additional fires broke out in other locations across the country in the following months, with the most recent fire in November of 2018 bringing the total up to seven.
The installation of the solar panels, which began several years ago, was a part of Walmart’s eco-friendly initiative, intended to source 35% of the company’s energy from natural and renewable sources by 2020.
Out of concern for public safety, all remaining solar panels have been disconnected until the issue can be addressed, likely putting a temporary hold on Walmart’s initiative.
In order to recoup their losses, Walmart is now requesting that court officials rule Tesla in breach of contract, compel them to remove all faulty solar panels and cover all damages and associated costs.
The filing (courtesy of the Los Angeles Times) reads in part: “To state the obvious, properly designed, installed, inspected, and maintained solar systems do not spontaneously combust, and the occurrence of multiple fires involving Tesla’s solar systems is but one unmistakable sign of negligence by Tesla.”
The report continues: “To this day, Tesla has not provided Walmart with the complete set of final ‘root cause’ analyses needed to identify the precise defects in its systems that caused all of the fires described above.”
More Bad News For Tesla
Following the filing of the complaint, Tesla stock dropped by 1.7% by the end of the day. With stocks already down 32% for the year, the company can’t afford this kind of negative publicity, much less the massive payout associated with the settlement.
SolarCity, the newly-acquired Tesla subsidiary responsible for the installations, was already the subject of recent controversy. The company, which Tesla obtained in 2016, was started by cousins of Elon Musk. This relationship to the Tesla CEO prompted an investigation and a hearing before a federal judge, with the charges being dismissed only last month.
This, coupled with the new lawsuit from Walmart, could have a drastic impact on the overall company. While it likely won’t bankrupt Tesla, their already-suffering profits could be placed under additional pressure. If the judge rules in Walmart’s favor, Tesla could be facing a substantial penalty.
As to what effect this will have on the market as a whole, it’s likely too early to tell.