Friday Dec 02, 2022

Tesla solar roof fires subject of SEC, Consumer Product Safety Commission investigations – Smart Cities Dive


Dive Brief:

  • The U.S. Consumer Product Safety Commission and U.S. Securities and Exchange Commission are investigating Tesla over fire risks associated with defects to its solar panels, according to reports from CNBC and Reuters. According to a lawsuit, the issue would affect more than 60,000 residential customers and 500 commercial or government customers, Reuters says.
  • The SEC investigation follows a whistleblower complaint from former field quality manager Steven Henkes, who alleged in 2019 that Tesla did not properly disclose the potential injury or property damage that could result from panel defects after it acquired solar developer SolarCity. Henkes has sued Tesla, saying he was fired for raising safety concerns. 
  • Pavel Molchanov, an analyst with Raymond James, said that since SolarCity remains just a small part of Tesla’s overall clean energy and automotive operations, the overall impact of the investigation could be limited.

Dive Insight:

When it acquired SolarCity in 2016, Tesla positioned itself as a clean energy giant, with CEO Elon Musk promising a “smoothly integrated and beautiful solar-roof-with-battery product” that customers could use to power their electric vehicles. However, the solar business has lagged since then. Although Tesla Energy was the top residential solar installer in the U.S. for several years, it was passed in 2018 by SunRun, according to an annual report from Wood Mackenzie. With 14% of the residential solar market — and buoyed by the acquisition of Vivint Solar — Sunrun remained the top installer in 2020, with Tesla in second place.

Molchanov said in an email that Tesla’s focus on its automotive business had come at the expense of the SolarCity arm. That, he said, could limit the impact of the SEC investigation. 

“If such an investigation were to apply to SolarCity individually, it would be potentially a big deal. But what remains of SolarCity represents a meaninglessly small part of Tesla’s business,” Molchanov said. “It may be that this investigation will spur Tesla executives to invest even less resources in the solar business, but regardless, it is immaterial for the overall company.”

Solar sales have rebounded in 2020 and 2021, although Musk admitted earlier this year the company had made “significant mistakes” with its solar roof plans. So far, Tesla has installed 260MW of solar in the first three quarters of 2021, with deployments more than doubling year over year, according to its third-quarter earnings statement. …….


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