Putting Out the Fire: Walmart and Tesla attempt to resolve legal disputes over solar panel rooftop fires

September 6, 2019

2 min read

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What's going on here?

Days after Walmart came out swinging with a lawsuit against Tesla, the two parties have released a joint statement committing to resolving the issue amicably.

What does this mean?

Tesla is facing its most powerful legal adversary ever; the giant retailer, Walmart. Since 2010, Walmart has contracted with SolarCity (later bought by Tesla in 2016) to install solar panels on over 200 of its stores’ rooftops. However, following fires on top of seven Walmart stores throughout 2012-2018, Walmart has filed a lawsuit against Tesla. The lawsuit alleges that the fires resulted from Tesla’s widespread negligence and their failure to meet industry standards for installation and inspection. 

However, in a dramatic turn of events, Walmart and Tesla released a joint statement last week. The statement reads “we 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”.

Tesla has agreed to pay for the fire damage and will also be continuing investigations into the root cause of the fires. However, Walmart has yet to drop the lawsuit as the complaint is still on file with New York state court.

What's the big picture effect?

Both Tesla and its CEO, Elon Musk, have faced their fair share of lawsuits; however, according to Business Insider Tesla has never had a corporate adversary as invested and determined as Walmart. Suffice to say that Tesla is worried! 

The bad news for Tesla doesn’t stop there. Just a few weeks ago the German rental car company, Nextmove, cancelled a $5.55 million order from Tesla. Nextmove said in a statement that they were unhappy with Tesla’s inability to ensure defect-free deliveries

All of these events are happening against the backdrop of a disastrous second-quarter earnings release for Tesla. So far, Tesla is the worst performer on the Nasdaq 100 this year, with a 41% loss. Further reputational damage these past few weeks is clearly not going to help Tesla get back on track. 

Tesla’s 2016 purchase of SolarCity was, for some, an all too predictable disaster. In 2016, Goldman Sachs said that SolarCity was the “worst positioned” for growth among its competitors. However, Tesla ignored Wall Street’s predictions and bought the bankrupt SolarCity, which was co-owned by Musk’s cousin. This latest misstep compounds Tesla’s misfortune and will further agitate its shareholders. The reputational damage suffered may end up being just a blip in the company’s history, but right now Tesla needs to tread lightly.

Tesla will have to compensate Walmart millions of dollars in damages. Whether this will be covered under Tesla’s insurance is still uncertain. To save themselves from further flames, Tesla must ensure that other SolarCity customers do not experience the same issues as Walmart. However, even if they do so, they will still be far from regaining shareholder confidence!

Report written by Lina Jeffcock

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