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Solar Panel Fires at Walmart Stores Result in Breach of Contract With Tesla

When a breach of contract between businesses occurs, it can be damaging to not only the relationship between the two entities, but also towards the reputations of the parties. A breach of contract generally occurs when one of the parties to the contract does not honor their obligations contained in the agreement. Breaches can happen by way of non-performance or interference with the other party or because of a problem with the products or services that were the subject of the contract. For both Walmart and Tesla this rang especially true after the retailer contracted with Tesla to acquire solar panels for 200 of its stores. Subsequently, the purchased solar panels caught fire.

In Walmart Inc. v. Tesla Energy Operations Inc., Case No. 654765/2019, in the Supreme Court of the State of New York, County of New York (2019), Walmart sued electric vehicle and clean energy business Tesla after its solar panels on seven of the retailer’s stores caught fire between 2012 and 2018. The complaint states Tesla engaged in “widespread, systematic negligence” and “failed to abide by prudent industry practices in installing, operating and maintaining its solar systems.” The panels themselves were installed on more than 200 Walmart locations across the United States.

The defective solar panels were installed by Tesla’s newly acquired solar business SolarCity. Tesla founder Elon Musk’s first cousins Pete and Lyndon Rive founded SolarCity in 2016 prior to Musk purchasing it for roughly $2.6 billion.

In Walmart’s complaint, the retailer alleges Tesla’s solar business “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.”

The retailer also claims that “Tesla routinely deployed individuals to inspect the solar systems who lacked basic solar training and knowledge.” In addition, Walmart claims Tesla failed to ground its solar and electrical systems properly and the solar panels contained defects visible to the naked eye. Walmart alleges that because these defects were so apparent, Tesla should have uncovered and repaired them to avoid any fires ever occurring. Walmart seeks both damages from Tesla as well as the removal of its solar panel systems from its stores.

Since Tesla acquired SolarCity, it aimed to offer a one-stop shop for solar technology, batteries, and electric cars. Though its solar offerings are primarily for residential use, about a third of the energy-generating potential of Tesla’s California panels comes from nonresidential locations, according to the California Solar and Storage Association.

Tesla and SolarCity issued a joint statement saying the companies “look forward to addressing all issues and re-energizing Tesla solar installations at Walmart stores, once all parties are certain that all concerns have been addressed” and that “Together, we look forward to pursuing our mutual goal of a sustainable energy future. Above all else, both companies want each and every system to operate reliably, efficiently, and safely.”

Houston Business Litigation Attorneys

A breach of contract can have severe repercussions for any type of business. The lawyers at Adair Myers Graves Stevenson are dedicated to helping businesses navigate all of their legal issues. We are a full-service law firm, available to provide your business with strategic and personalized legal advice. If you need the assistance of a business litigation attorney, contact Adair Myers Graves Stevenson today to learn how we can help.