SEC Investigates Tesla Over Solar Panel Defect Allegations

Tesla Under SEC Investigation Regarding Solar Panel Fire Risks

U.S. securities regulators have initiated an investigation into Tesla. This action follows allegations made by a whistleblower concerning potential risks of fire associated with the company’s solar panel systems, which were not reportedly disclosed to shareholders.

Whistleblower Complaint and SEC Response

The allegations originated with Steven Henkes, a former Tesla employee. He initially filed a complaint with the U.S. Securities and Exchange Commission (SEC) in 2019, as reported by Reuters. The existence of the probe was revealed after Henkes submitted a Freedom of Information Act request to the SEC, seeking information about the status of his original claims.

Although the SEC did not release any specific records to Henkes, a letter dated September 24 confirmed that the investigation remains “active and ongoing.” The SEC maintains a policy of not commenting on potential or ongoing investigations, as communicated to TechCrunch.

Details of the Allegations

Henkes’ complaint centers on claims that Tesla and its subsidiary, SolarCity – acquired in 2016 – failed to adequately inform customers about potentially defective electrical connectors. These connectors allegedly posed a fire hazard.

Henkes’ Employment History and Legal Action

According to his LinkedIn profile, Henkes was terminated from his position at Tesla in August 2020, after nearly four and a half years of service. Prior to his dismissal, he held the role of field quality manager.

His professional background also includes experience as a quality development and planning manager at Toyota North America. Following his termination, Henkes filed a lawsuit against Tesla, alleging wrongful dismissal in retaliation for voicing safety concerns.

The complaint details that Henkes had previously alerted Tesla to the fire risk before contacting the SEC with his concerns.

Previous Incidents and Project Titan

This is not the first instance of safety concerns surrounding Tesla’s solar panels. In 2019, Walmart initiated a lawsuit against the automaker, alleging breach of contract and gross negligence. This followed reported fires on the rooftops of seven Walmart stores equipped with Tesla solar panel systems.

The lawsuit was ultimately dropped after a settlement was reached between the two companies. Furthermore, Business Insider reported on a large-scale Tesla project, internally known as “Project Titan,” dedicated to replacing faulty solar panel connectors.

Separate Investigation into Autopilot

Tesla is currently facing another safety investigation from a different federal agency. The National Highway and Transportation Safety Administration (NHTSA) is investigating incidents involving crashes that occurred while Tesla’s Autopilot advanced driver assistance system was in use.

This investigation runs concurrently with the SEC probe into the solar panel fire risks, adding to the regulatory scrutiny faced by the company.