Walmart is adding solar burns to Tesla’s challenges. The giant U.S. retailer sued Elon Musk’s $40 billion electric-car maker on Tuesday, accusing it of negligence after identifying its solar panels as the alleged cause of at least seven fires at Walmart stores since 2012. The case further dents Tesla’s quality-control image, while also putting Musk’s questionable 2016 acquisition of SolarCity back in the spotlight.
Musk’s rationale for snapping up the solar panel installer for $2.6 billion was to help turn Tesla into an across-the-board energy company rather than just a carmaker. But SolarCity was also facing money worries. And Musk was not just its chairman, but also its biggest shareholder – and two of his cousins were top executives. That gave the transaction the air of a bailout rather than a strategic play.
SolarCity’s pace of quarterly installations has since tumbled some 85%. That is in part a consequence of Tesla having to focus on ramping up production of its Model 3 sedan, which left virtually all other products strapped for resources. Earlier this year, for example, Musk said Tesla’s Powerwall batteries for storing solar-generated energy at homes and offices – developed before the SolarCity acquisition – were “feeding off scraps for quite a while” as Model 3 batteries took precedence.
Yet anecdotally, there have been increasing numbers of complaints about the workmanship on the car, from poor paint jobs to misaligned doors to faulty software, as well as a number of reported fires across Tesla’s range of models.
Walmart’s suit reinforces the impression that Musk’s company may still be living on the edge. And it comes at an inopportune time for Tesla, which just this week relaunched the solar-panel roof business, offering customers the option of either renting or buying for as little as $100 up front. With that new pricing, tweeted Musk, “It’s like having a money printer on your roof.” Maybe, but only if he has now overcome the problems that turned Walmart into an unhappy customer.
Request a free trial of Breakingviews here