US SEC probes Tesla solar-cell danger

A former employee alleges the company hid fire risks from public, shareholders.

A complaint alleges that Tesla and SolarCity, the solar-cell business it acquired, failed to properly notify shareholders and the public of fire risks associated with its equipment. Tesla CEO Elon Musk has defended the transaction in court this year in a shareholder lawsuit. Picture: Reuters

The US Securities and Exchange Commission has opened an investigation into Tesla that touches at least in part on the company’s solar-cell activity.

The SEC acknowledged the probe in response to a Freedom of Information Act request filed by a former Tesla employee who previously filed a complaint with the SEC, according to documents viewed by The Wall Street Journal.

The person alleged in the complaint to the regulator back in 2019 that Tesla and SolarCity, the solar-cell business it acquired, failed to properly notify shareholders and the public of fire risks associated with its equipment, according to one of the documents.

The individual, a former field quality manager at Tesla named Steven Henkes, in his records request sought information relating to his complaint. The SEC denied the request in a letter dated Sept. 24, 2021, saying there is an “active and ongoing” investigation, one of the documents states.

The SEC declined to comment. Tesla didn’t respond to a request for comment on the probe previously reported by Reuters. It couldn’t be determined whether the investigation remains open.

Mr Henkes said he sued Tesla in November 2020 after the company fired him, allegedly for raising safety concerns. The hearing was set for April 2022, he said.

In his original complaint to the SEC dated May 21, 2019, Mr Henkes alleged that components the company sold with solar panels risked catching fire.

He said the issue was brought to SolarCity’s attention in 2015 but shipments continued. In the complaint, Mr Henkes said Tesla in 2017 began a recall and remediation campaign that was continuing through the time the complaint was submitted in 2019.

But Tesla wasn’t transparent about the remediation effort and 30,000 customers couldn’t turn off the systems until remediation occurred, which led to house fires, according to the complaint.

Walmart sued Tesla in 2019 over allegations that some of the solar panels installed on the roofs of their stores had sparked fires. The company said the fires cost them hundreds of thousands of dollars to repair.

Tesla acquired SolarCity in 2016.

Tesla CEO Elon Musk defended the transaction in court this year in a shareholder lawsuit. A verdict in the trial is pending.

The Wall Street Journal