SEC investigating Tesla over solar panel defect allegations

U.S. securities regulators have opened a probe into Tesla over allegations from a whistleblower that the company did not disclose to shareholders fire risks from its solar panel systems.

The allegations were made by Steven Henkes, a former Tesla employee, who filed his complaint with the U.S. Securities and Exchange Commission back in 2019, Reuters reported. The probe only came to light after Henkes filed a Freedom of Information Act request with the commission regarding the outcome of his original whistleblower allegations.

While the SEC did not provide any records to Henkes, it did confirm in a September 24 letter that “the investigation from which you seek records is still active and ongoing.” The SEC told TechCrunch that it “does not comment on the existence or nonexistence of a possible investigation.”

In his complaint, Henkes alleges that Tesla and SolarCity — its subsidiary that it acquired in 2016 — did not let customers know about defective electrical connectors that could cause fire.

Henkes was fired from Tesla in August 2020 after working for the company for nearly four and a half years, according to his LinkedIn profile. Before his role was terminated, he was a field quality manager. He also previously worked as a manager focused on quality development and planning for Toyota North America.

Henkes later sued Tesla for wrongful termination, claiming that his dismissal was in retaliation for raising safety concerns. According to his complaint, he notified Tesla about the fire risk prior to expressing his concerns to the SEC.

This is not the first time that issues regarding the safety of Tesla’s solar panels have come to light. In 2019, the automaker was sued by Walmart over allegations of breach of contract and gross negligence after rooftop solar panel systems on seven of the retailer’s stores allegedly caught fire. Walmart dropped the lawsuit after reaching a settlement with Tesla.

It was also revealed by Business Insider that Tesla undertook a massive project, codenamed Project Titan, to replace faulty solar panel connectors.

Tesla is also facing a separate safety investigation from another federal regulator. The National Highway and Transportation Safety Administration is also investigating the automaker regarding incidents of crashes that took place when Tesla’s Autopilot advanced driver assistance system was engaged.