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It isn’t as if the company’s core electric car business is without issue. But in 2016, it went and bailed out the debt-laden SolarCity, which was owned by Elon Musk’s cousins and in which he himself was an early investor. The result: Tesla’s own balance sheet got hugely levered.
And there was a reason why SolarCity was going downhill, as Walmart’s (WMT - Free Report) lawsuit has brought to light. Not only was the company incompetent, but it was also grossly negligent in the carrying out of its obligations under the contract.
Tesla’s market share further dwindled following the acquisition and it’s now a distant third with 29 MW of new installations since the acquisition. Market leaders SunRun and Vivint Solar installed 103 MW and 56 MW, respectively.
In Walmart’s case, it resulted in seven rooftop fires, the first few of which the company dismissed as stray incidents. But in 2018, there were three fires, the first in Beavercreek, Ohio (March 2018), followed by two in Denton, Maryland and Indio, California.
The fires didn’t result in loss of human life, but millions of dollars’ worth merchandise was lost, according to the company. That’s when Walmart asked Tesla to deactivate the panels on all 240 Walmart roofs. This is a costly affair for Tesla and outside the contract requirements, but given the risk, especially considering the number of people routinely frequenting the stores, it may not have been unreasonable.
Unfortunately, even after Tesla complied, there was another fire in a Yuba City, California store in November 2018.
Specific Complaints
The lawsuit claims among other things that the solar panels were defective in terms of design, were improperly installed, and safety measures for their maintenance and operation were below industry standards.
Moreover, Tesla’s own inspections had revealed 157 items requiring attention with 48 serious enough to render the sites unsafe. Walmart’s subsequent inspections exposed even more problems.
It also said that Tesla failed to identify defects, such as the hotspots appearing on many panels, which crack the back sheets and damage the electrical insulation. Moreover, Tesla was pasting red tape over the spots where it identified the problem, which blocked sunlight in those areas and created even more hotspots.
The failure to tighten field-made connectors facilitated moisture and water intrusion.
The maze of wires was often under pressure from sharp objects like concrete or metal edges, or were in expansion or contraction mode depending on the weather.
The inspection staff was found to be deficient in knowledge and training and was inadequately equipped to do the job.
The lawsuit was filed after Tesla’s inadequate responses to Walmart’s concerns. Walmart is claiming millions of dollars in damages and the right to uninstall the panels in the lawsuit filed Tuesday in New York state court.
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.
Image: Bigstock
Tesla Feels the Heat as Walmart Sues
Tesla (TSLA - Free Report) investors are screwed.
It isn’t as if the company’s core electric car business is without issue. But in 2016, it went and bailed out the debt-laden SolarCity, which was owned by Elon Musk’s cousins and in which he himself was an early investor. The result: Tesla’s own balance sheet got hugely levered.
And there was a reason why SolarCity was going downhill, as Walmart’s (WMT - Free Report) lawsuit has brought to light. Not only was the company incompetent, but it was also grossly negligent in the carrying out of its obligations under the contract.
Tesla’s market share further dwindled following the acquisition and it’s now a distant third with 29 MW of new installations since the acquisition. Market leaders SunRun and Vivint Solar installed 103 MW and 56 MW, respectively.
In Walmart’s case, it resulted in seven rooftop fires, the first few of which the company dismissed as stray incidents. But in 2018, there were three fires, the first in Beavercreek, Ohio (March 2018), followed by two in Denton, Maryland and Indio, California.
The fires didn’t result in loss of human life, but millions of dollars’ worth merchandise was lost, according to the company. That’s when Walmart asked Tesla to deactivate the panels on all 240 Walmart roofs. This is a costly affair for Tesla and outside the contract requirements, but given the risk, especially considering the number of people routinely frequenting the stores, it may not have been unreasonable.
Unfortunately, even after Tesla complied, there was another fire in a Yuba City, California store in November 2018.
Specific Complaints
The lawsuit claims among other things that the solar panels were defective in terms of design, were improperly installed, and safety measures for their maintenance and operation were below industry standards.
Moreover, Tesla’s own inspections had revealed 157 items requiring attention with 48 serious enough to render the sites unsafe. Walmart’s subsequent inspections exposed even more problems.
It also said that Tesla failed to identify defects, such as the hotspots appearing on many panels, which crack the back sheets and damage the electrical insulation. Moreover, Tesla was pasting red tape over the spots where it identified the problem, which blocked sunlight in those areas and created even more hotspots.
The failure to tighten field-made connectors facilitated moisture and water intrusion.
The maze of wires was often under pressure from sharp objects like concrete or metal edges, or were in expansion or contraction mode depending on the weather.
The inspection staff was found to be deficient in knowledge and training and was inadequately equipped to do the job.
The lawsuit was filed after Tesla’s inadequate responses to Walmart’s concerns. Walmart is claiming millions of dollars in damages and the right to uninstall the panels in the lawsuit filed Tuesday in New York state court.
So it’s no wonder the Zacks Rank #4 (Sell-rated) company’s shares are swooning. For safer growth stocks, consider America's Car-Mart (CRMT - Free Report) , Consolidated Communications Holdings (CNSL - Free Report) , Ferrellgas Partners , or Intrepid Potash (IPI - Free Report) , since all of them have a Zacks Rank #1 rating and VGM score A. Or head over to the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.
See 7 breakthrough stocks now>>