Regulatory Pressure Tightens on Tesla... This Time Over 'Solar Panel Defects'

[Asia Economy Reporter Jo Yoo-jin] U.S. electric vehicle company Tesla is under investigation by U.S. regulatory authorities following a whistleblower claim that it concealed defects in its solar panels for years. Regulatory pressure on Tesla, which is already facing investigations by transportation authorities over its autonomous driving assistance system, is expected to intensify as a result of this investigation.

According to major foreign media including CNBC on the 6th (local time), Tesla is being investigated by the Securities and Exchange Commission (SEC) following a whistleblower allegation that the company failed to properly notify shareholders and the public for years about fire risks caused by defects in its solar panels.

Solar panels installed on the entrance wall of the Tesla showroom in New York, USA (Photo by Bloomberg)

Steven Hanks, a former field quality manager at Tesla, reportedly filed a whistleblower complaint with the SEC in 2019, claiming that Tesla did not properly inform shareholders and the public about risks related to defects in its solar panel systems.

In a response letter to Hanks last September, the SEC confirmed the investigation, stating that "an inquiry requiring records is still ongoing."

In his whistleblower complaint, Hanks alleged that Tesla and its subsidiary, solar panel company SolarCity, failed to disclose to shareholders their responsibility for building damage, the risk of user injuries, and the possibility of fires. He also stated that customers were not informed that defective electrical connectors could cause fires.

SolarCity is a company Tesla acquired in 2016, which has supplied solar power generation systems to homes, government offices, and commercial facilities.

Earlier, the U.S. Consumer Product Safety Commission (CPSC) also conducted an investigation into the fire risks of Tesla’s solar installations following Hanks’ concerns.

Hanks, who also worked as a quality management manager at Japanese automaker Toyota, requested Tesla’s management to halt the operation of the fire-prone solar systems and report to regulatory authorities, but when his requests were ignored, he filed the whistleblower complaint.

Hanks was subsequently fired from Tesla in August last year and filed a lawsuit against the company, claiming that his dismissal was retaliation for raising safety concerns.

(Photo by Reuters)

Concerns about Tesla’s solar power systems have existed for several years, but this is the first time regulatory agencies have launched an investigation. Previously, in 2019, Walmart, the largest U.S. retailer, filed a lawsuit claiming that fires occurred at seven of its stores due to Tesla’s rooftop solar power systems.

Foreign media predict that this investigation will increase regulatory pressure on Tesla, which is already under scrutiny for accidents related to its autonomous driving assistance system, Autopilot.

The U.S. National Highway Traffic Safety Administration (NHTSA) is conducting a large-scale investigation of 765,000 Tesla vehicles across four models (Model Y, Model X, Model S, Model 3) produced from 2014 to this year.

This follows a series of 11 accidents related to Autopilot, including a fatal crash in May 2016 on a Florida road where a Tesla Model S, operating in Autopilot mode, collided with a semi-trailer.

Meanwhile, after the report on the solar panel defects was released, Tesla’s stock price fell as much as 6.4% during the trading session to $950.5, marking the lowest level in two months. However, it recovered some losses by the close of trading, finishing at $1,009.01. This represents an 18% decrease from the all-time high of $1,229.91 reached on the 4th of last month.