Walmart Inc. (WMT:US) sued Tesla Inc.’s (TSLA:US) energy operations, formerly known as SolarCity, for breach of contract, claiming it failed to live up to industry standards in the installation of solar panels on top of hundreds of stores, resulting in multiple fires across the country.
The retailer said it had leased or licensed roof space on top of more than 240 stores to Tesla for the installation and operation of solar systems. But as of November 2018, fires broke out at no fewer than seven of the stores, forcing the disconnection of all the solar panel systems for the safety of the public.
In a complaint filed in New York state court Tuesday, Walmart said its inspectors found that Tesla “had engaged in widespread, systemic negligence and had failed to abide by prudent industry practices in installing, operating and maintaining its solar systems.”
Many of the panels had defects that could be seen by the naked eye or were easily identifiable with proper equipment, Walmart said, indicating that Tesla had deficient inspection procedures or hadn’t been inspecting the sites at all. The retailer’s inspectors saw dangerous connections, including loose and hanging wires at several locations.
“Many of the problems stemmed from a rushed, negligent approach to the systems’ installation,” Walmart said. “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.”
Tesla didn’t immediately address the retailer’s complaint.
Tesla acquired SolarCity for US$2.6 billion in 2016. Tesla and SolarCity agreed to a stock-for-stock exchange in which SolarCity’s shareholders would receive 0.11 shares of Tesla stock in exchange for each share of SolarCity they owned.
Tesla Chief Executive Officer Elon Musk earlier this month was cleared by a federal court of liability for alleged short-swing profits from buying SolarCity, which was founded by his cousins.
The case is Walmart Inc. v Tesla Energy Operations, New York State Supreme Court, New York County.