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Trouble at Tesla: How fires and lawsuits could thwart Elon Musk's big bet on solar energy

Elon Musk
Elon Musk's vision is to replace rooftops with solar tiles to power homes for decades Credit:  Mike Blake/ Reuters

This summer, Elon Musk sat down with a lawyer. Tesla was being sued by investors who questioned the electric car company’s acquisition of the solar panel firm SolarCity, and its chief executive was giving evidence in private.

“You seem like a very, very bad person. Just a bad human being,” Musk said to Randall Baron, the lawyer representing the claimants, according to documents obtained by the US legal nonprofit PlainSite.

“Do you just think about money? Is that your motivation? What is your purpose in life?” he asked. “People like you make me sad about the future and sad about America.”

The seven-hour long testimony is peppered with these insults, but followers of Tesla will be familiar with Musk’s abrasive style, which has won him as many fans as critics. The lawsuit is far from the only problem at the fledgling solar division, however.

Tesla’s energy business, which includes solar power and home battery packs, is not as well-known as its cars. But Musk has claimed it could be the its biggest business within a few years.

SolarCity, which manufactured and installed solar panels on customers’ roofs, was founded in 2006 by Musk’s cousins Peter and Lyndon Rive. In 2016 Tesla bought it in a $2.6bn (£2bn) merger.

Solarcity install solar modules on the roof of a Long Beach, California home Credit: Al Seib/Los Angeles Times

Once a US market leader, it has since struggled to fulfil its promise.

The group of shareholders challenging the merger are arguing it was effectively a bailout, motivated by the Tesla board’s own financial interests (several Tesla directors were SolarCity shareholders). Tesla has called the claims “false and misleading”. Meanwhile, companies have eaten away at its market share and figures show its pace of fitting panels is plummeting.

In the first quarter of 2017, shortly after the acquisition, Tesla fitted 150 megawatts of solar generating capacity. In the third quarter of 2019 it was just 43.

“They were one of the pioneers in financing for residential solar, so that the customer didn’t have to pay for the purchase upfront,” says Russell Schmit, chief operating officer of California-based consulting firm Sage Energy Consulting, and a 20-year veteran of the solar industry.

“But they never were making any money, and I think because of that they have scaled back their ambitions.”

Investment in a new form of solar panel, which integrates the cells into the roof tiles, has had limited success.

Solar tiles have been a longstanding ambition of renewable energy firms, and would be a significant achievement – if the company can pull it off.

Musk first announced that Tesla would start producing solar tiles in 2016, but the technical challenge of connecting and maintaining each tile and installing the product in adherence to building and electrical codes is formidable.

They are available in eight US states and analysts estimate as few as 50 may have been installed – far short of the promised solar revolution.

“I don’t think they’re going to make Solar Roof work,” says Joseph Osha, an analyst at JMP Securities. “It’s an ambitious thing but it’s a whole lot of trouble.”

He said that the rest of the solar industry regarded the product as a “very interesting science project”.

Complaints from customers also suggest it is not immune from the service issues that have plagued Tesla’s car business. Scores of negative online reviews complain about leaking roofs, hours spent on hold to customer service phone lines and long delays to have panels installed or fixed.

Lead installers for SolarCity install solar electrical panels on the roof of a home  Credit: Christian Science Monitor

One US homeowner, who did not want to be named because he feared the company would treat him differently as a result, said he had struggled for months to get the account for the panels moved into his own name from the previous homeowners, spending hours on the phone and sending scores of emails back and forth.

“They seem hamstrung by the lack of deliberateness with which the customer service side of the company is composed,” he said.

The company has been struck by a wave of litigation over the safety of its solar panels. In August, the US retail giant Walmart accused Tesla’s solar panels of being behind a series of fires. The lawsuit was settled this week, with undisclosed terms. Amazon has also claimed its solar panels have caught fire.

Another lawsuit brought by the insurance company Citation, which insured a Massachusetts couple who suffered a fire in their Tesla solar panel-equipped home last year, is set to have a hearing in January next year.

Tesla also faces a $75,000 lawsuit from two former employees who allege that they lost out on commission because of Tesla’s failure to fulfill government contracts it had signed up for.

“Defendants had no intent to honor the obligations they had under the government contracts”, the claim, brought by Richard Eskay and Sean Price, says. Tesla did not respond to a request for comment.

Last month the company launched its third version of the Solar Roof. Previous iterations, Musk admitted, “didn’t really work”. Never one to shy away from an ambitious deadline, he said the company would install up to 1,000 roofs per week in the coming months. Patient customers will be hoping that it is third time lucky.