Tesla 'knew about the problem well before 2017,' whistleblower says of alleged solar panel risk

·Reporter

December 8, 2021 at 11:28 AM·4 min read

A former Tesla (TSLA) quality engineer turned whistleblower says the electric car maker has known for at least four years that some of its solar panels could catch fire but failed to disclose or fix the problem.

On Monday, Reuters revealed that complaints over the alleged hazards filed by the whistleblower are the subject of an ongoing investigation by the U.S. Securities and Exchange Commission. The agency confirmed the investigation in a Sept. 24 letter to the former engineer, Steven Henkes, responding to his Freedom of Information Act request.

“I was made aware through internal documents, third-party engineering reports, that Tesla/SolarCity knew about this problem well before 2017,” Henkes told Yahoo Finance Live.

Tesla acquired Solar City for $2.6 billion in 2016, in a controversial deal that spawned a shareholder lawsuit. The electric car giant's stock was down as much as 6% on Monday following reports of the SEC probe, though it pared its losses by the end of that day.

'He tried to work internally with Tesla'

Henkes said he first learned of problems with defective electrical connectors in December 2017, while working for Tesla as a field quality manager. He says he was fired from the company about three years later in April 2019, after reporting his concerns to government regulators.

Tesla has not responded to Yahoo Finance’s request for comment; however, the company has said it implemented a remediation plan for panel maintenance.

Henkes’ lawyer Robert Wallace told Yahoo Finance the repairs fall short of making the panels safe.

“They're not being done properly. They're not being done safely. They're not using the proper tools to take care of the problem,” Wallace said. “The problem Steven originally complained about, what he was fired for, is ongoing.”

Steven Henkes, a former Tesla and Toyota employee who complained to the SEC in 2019 that Tesla failed to properly notify shareholders and consumers of fire risks of its solar panel systems, is seen during an interview in San Francisco, California, U.S. on December 1, 2021. Picture taken December 1, 2021. REUTERS/Nathan Frandino (Nathan Frandino / reuters)

Wallace says Henkes first tried to address the concerns in-house.

“He tried to work internally with Tesla to get the problem resolved,” Wallace said. “And when he was not satisfied, that's when he filed the SEC and the U.S. Consumer Products Safety Commission complaint, jointly, in April of 2019."

According to Henkes, his position as a field quality manager gave him insight into the alleged risks. Specifically, he points to Tesla’s retrofit, or traditional solar panels, installed between 2015 through late 2018, as those that pose a danger.

“It was my job to explain, and/or gain consensus, to the suppliers who were supplying the component that we had a problem — a very large problem in the field,” Henkes said. “Not only that, my responsibility was to engineer and develop a method for remediation and remanufacturing in the field, and also starting up remanufacturing lines.”

Troubles with Tesla’s solar panels have been the subject of litigation from residential and commercial customers.

In 2019, Walmart filed a lawsuit against the company, which has since settled, alleging 492 counts of negligence and breach of contract over panels that it said caused seven warehouse fires between 2012 and 2018. Amazon joined Walmart in claiming that one of its warehouses caught fire due to Tesla’s panels.

According to Business Insider, Tesla said connectors used in its panel installations and manufactured by Amphenol Corp. (APH) “experienced failures and disconnections at a higher rate than our standards allow,” though over a year’s time, abnormal behavior was exhibited at less than 1% of sites where the connectors were installed. Amphenol said its connectors were not responsible for panel fires, according to the LA Times.

In addition to complaints filed with regulators, Henkes filed a lawsuit against Tesla claiming he was wrongfully terminated in retaliation for his reports. The suit is now pending and scheduled for arbitration in April of next year.

“First and foremost my main intent is to protect the public and to protect families in their homes,” Henkes said.

Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.

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'He tried to work internally with Tesla'

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