We live in an extremely litigious world where anyone can sue anyone for just about any reason.
I’d venture to bet, more often than not, most lawsuits involving businesses are frivolous and without merit.
However, this week, one particular lawsuit caught my eye for a few of reasons:
- Who it involves.
- What the suit claims.
- What the suit means.
Let me explain.
Reason No. 1 … who’s suing whom
First, the suit was filed in New York by retail giant Walmart. It alleges the manufacturer of solar panels sitting atop some Walmart stores is liable for fire damages caused at some of those stores, according to CNBC.
The manufacturer, you ask, was none other than Tesla.
Walmart claims solar panels sold by Tesla led to seven of its stores catching on fire.
The suit, which is a basic breach of contract suit, asks Tesla to remove the solar panels and pay damages related to the fires Walmart said the panels caused.
Tesla shares closed lower after the news of the suit hit Tuesday. Trading Wednesday hasn’t helped as shares were down 2.9%, or $6.452 per share, at 3 p.m. EDT.
Reason No. 2 … the claims in the suit
Walmart suggests while Tesla did conduct inspections of the solar systems, the inspectors “lacked basic solar training and knowledge.”
The suit also alleges the solar and electrical systems weren’t grounded properly, and the solar panels “contained a high number of defects that were visible to the naked eye.”
That brings up a question I have: If the defects were visible to the naked eye, why didn’t Walmart mention it before their buildings caught fire? Also, did Walmart care to inspect the work done by a third-party company on its property?
If they did mention it to Tesla, that is a strong case for neglect. If not, why not? Also, if Walmart didn’t inspect work that was done, that is pretty neglectful too, right?
Now, reason No. 3 … what the suit means
Tesla’s solar pursuits are hurting.
CEO Elon Musk sent out a storm of tweets last weekend advertising that residents in some states can rent Tesla-made solar rooftop systems without a contract. Have an extra $50 or so a month? Musk can hook you up.
After purchasing SolarCity in 2016, Tesla has tried to make a lot of hay out of solar energy. However, the company reported installing only 29 megawatts of solar in the second quarter of 2019.
That’s pretty bad considering SolarCity was installing 200 megawatts a quarter before they were bought by Musk.
Oh, and did I mention SolarCity was hemorrhaging debt in 2016 … and was owned by two of Musk’s first cousins, which Walmart used as a salvo in its filing.
So, Tesla stock continues to fall, lawsuits continue to pile up, key leaders are departing like it’s the Titanic and the company is struggling to repay its loans.
Now, repercussions from Tesla’s purchase of SolarCity. Again, not that I think Walmart doesn’t have some kind of culpability in all of this, but its case against Tesla is pretty strong and could lead to a big check the electric automobile manufacturer will have to write.
Things just continue to get worse for Musk.