Earlier in the week, Tesla TSLA, -2.23% announced that they are implementing a radical change in their solar panel business and excites analysts after they uncovered their plan to offer a renting option for their equipment. But following Walmart’s lawsuit against the tech giant, stocks for Tesla went down more than 2% on Wednesday.
Walmart WMT, -0.03% filed a multi-million dollar lawsuit against Tesla alleging that Elon Musks’s company breached the contract between the two entities because of their “severe negligence” leading to a fire that broke out in seven Walmart stores across the country for the last seven years.
The retail giant claims that the fire, which started in the roofs of their stores where Tesla solar panels were installed have risked the lives of their customers and employees and have accrued the company with losses in terms of damage to property and burned merchandize. Walmart asks the court to demand from Tesla to pay them an amount corresponding to the damages as well as to order the solar panel manufacturer to take out their equipment from Walmart stores before they could do further damage.
Analysts are tuned in the development of the case and are eagerly watching out for “potential liabilities” after the suit. Tesla’s $2.6 billion SolarCity Corp. acquisition in 2016 “has not yet been accretive” to Tesla, given the 85% reduction in solar installations over the past three years, they said.
The lawsuit is “yet another blow to the already tarnished” solar business at Tesla, an analyst at ISI Evercore said in a note Wednesday.
In general, Tesla shares are down 33% this year, contrasting with gains of 17% and 12% for the S&P 500 SPX, +0.82%, and the Dow Jones Industrial Average. DJIA, +0.93%. The future of Tesla’s solar panel business is now on the line but surviving it is only a time’s tale.
