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Aug. 21, 2019, 7:13 a.m. EDT

Walmart sues Tesla over solar-panel rooftop fires

‘Gross negligence’ on Tesla’s part led to spate of rooftop fires, Walmart says

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By Claudia Assis, MarketWatch

Getty Images
An employee pushes grocery carts at a Walmart store in Miami.

Walmart Inc. is suing Tesla Inc. over a spate of roof fires at several Walmart stores that the retailer alleges were caused by Tesla solar panels.

Walmart /zigman2/quotes/207374728/composite WMT -0.78%  is suing for breach of contract and alleges “gross negligence” on Tesla’s /zigman2/quotes/203558040/composite TSLA +5.27%  part for the fires, which it says all started on the rooftops of several stores in California, Maryland and Ohio that had Tesla solar panels.

“To state the obvious, properly designed, installed, inspected, and maintained solar systems do not spontaneously combust, and the occurrence of multiple fires involving Tesla’s solar systems is but one unmistakable sign of negligence by Tesla,” according to the complaint filed on Tuesday.

Related: Tesla slips to third place for solar installations in the U.S., Sunrun keeps lead

Tesla did not immediately return a request for comment. A Walmart spokesperson said it had “nothing more to add” beyond the complaint.

Tesla bought SolarCity Corp. in June 2016 for $2.6 billion. At the time, SolarCity was the largest U.S. home-solar-panel installer, and Tesla Chief Executive Elon Musk was then chairman and largest shareholder of both companies. SolarCity was founded and run by two of Musk’s cousins, who later left the business. Some Tesla shareholders sued over the acquisition, and that case is due to go to trial in March 2020.

Walmart’s lawyers took a swipe at the deal in the Tuesday complaint.

“On information and belief, when Tesla purchased SolarCity to bail out the flailing company (whose executives included two of Tesla CEO Elon Musk’s first cousins), Tesla failed to correct SolarCity’s chaotic installation practices or to adopt adequate maintenance protocols, which would have been particularly important in light of the improper installation practices.”

According to the complaint, the stores affected were among the more than 240 Walmart stores that had leased or licensed roof space to Tesla for the installation of solar panels.

Tesla designed the systems and presented them as “safe, reliable” and an environmentally conscious way for Walmart to reduce energy costs, according to the filing. Tesla remained the systems’ owner and promised to maintain them, it said.

By May 2018, however, it was “clear that Tesla had breached its contractual obligations,” and was asked to disconnect the systems, and Tesla complied, the complaint said. That was not enough to prevent another fire, this time in Yuba City, California, Walmart said in the complaint. The complaint also cites rooftop fires before 2018.

In total, seven stores have experienced fires that Walmart alleges were due to faulty solar panels, according to the complaint, which lists thousands of dollars in expenses with repairs, damage to merchandise and other costs.

See more: Tesla’s key executive departures, in one handy list

Earlier this week, Tesla said it was rebooting its solar business by offering rentals.

Shares of Tesla were down 1.1% in the extended session, adding to earlier losses. The stock is down 32% this year, contrasting with gains of 16% and 11% for the S&P 500 index /zigman2/quotes/210599714/realtime SPX -0.11%  and the Dow Jones Industrial Average. /zigman2/quotes/210598065/realtime DJIA -0.21%  .

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Claudia Assis is a San Francisco-based reporter for MarketWatch. Follow her on Twitter @ClaudiaAssisMW.

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