Tesla under SEC probe on claims of hiding solar system fire risks

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Tesla installed 83MW of solar during Q3 2021. Image: Tesla.

Tesla is being investigated by the US Securities and Exchange Commission (SEC) following a claim that the company did not appropriately inform its shareholders and the public about potential fire risks from its solar systems, according to a report by Reuters.

Former Tesla field quality manager Steven Henkes filed a whistleblower complaint against the company in 2019. Following a Freedom of Information Act request from Henkes, the SEC has since revealed the Tesla probe.

Reuters obtained a copy of the SEC’s letter to Henkes, dated 24 September, which said: “We have confirmed with Division of Enforcement staff that the investigation from which you seek records is still active and ongoing.” An SEC official noted that the letter should not be taken as an indication that there was any legal wrongdoing.

Henkes claims that Tesla did not notify its customers about the fire risks associated with defective electrical connectors. He alleges that instead of warning of the fire risks or reporting problems to regulators, Tesla told customers that it had to carry out maintenance on the systems.

A former manager at Toyota Motor, Henkes moved to SolarCity in 2016, months before the residential solar installer was acquired by Tesla. In the SEC complaint, Henkes said he told Tesla management that the company should shut down the defective systems, inform regulators and notify customers.

He was fired from Tesla in August 2020, which he believes was done in retaliation for raising safety concerns. He has since filed a wrongful termination lawsuit against the firm.

Tesla did not respond to a request to comment by PV Tech.

While concerns over fires linked to Tesla’s solar systems have been raised previously, this is the first report of a probe by the SEC, according to Reuters.

Walmart took Tesla to court in 2019 as it alleged that the company’s mismanagement of solar system installation and maintenance was linked to a series of store fires. While Walmart had linked the incidents to Tesla’s alleged use of staff lacking “basic solar training and knowledge”, the retailer dropped the lawsuit later in the year, saying the two companies had reached an agreement.

In its most recent quarterly results statement, Tesla revealed it installed 83MW of solar during Q3, a 46% increase year-on-year, while energy storage deployments climbed 71% to 1,295MWh.

In October, direct claims against Tesla CEO Elon Musk were dismissed over his role in the acquisition of SolarCity. A Delaware judge decertified the class action lawsuit and limited the shareholder action against Musk, although he still allowed them to sue the CEO in his capacity as Tesla director.

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