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Tesla Slides After Walmart Sues the Company, Claiming Its Solar Panels Caught Fire On Tuesday, Walmart sued Tesla's solar-energy unit alleging that gross negligence by employees in installing solar panels lead to fires in seven stores.

By Carmen Reinicke

This story originally appeared on Business Insider

Bloomberg | Getty Images

Walmart is going after Tesla, and it's putting downward pressure on the stock.

Shares of Tesla fell as much as 2% in early trading Wednesday. On Tuesday, Walmart sued the company's solar-energy unit in New York state, claiming that its solar panels caught fire at seven stores.

The lawsuit alleges that the fires were caused by the solar panels that Tesla's solar-energy group had installed on the roofs of some Walmart stores. Walmart alleges that the fires were a result of "widespread negligence" by Tesla and the employees who installed the systems.

Related: Tesla Snapshot on the Entrepreneur Index™

"As of November 2018, no fewer than seven Walmart stores had experienced fires due to Tesla's solar system," the company said in its lawsuit, filed in New York state court.

The Walmart lawsuit is not the first that has been brought against Tesla's solar-energy group. In 2018, the company was sued by three former employees that alleged that employees of the group falsified sales accounts to inflate their bonuses and the value of the company, as well as discrimination, harassment, and inadequate pay.

That lawsuit is now in private arbitration. An investigation by Tesla found the allegations to be untrue, a Tesla representative told Business Insider's Graham Rapier.

Related: Tesla promises 'one million robo-taxis' in 2020

Tesla's solar-energy unit was acquired by the company in 2016. The unit, SolarCity, had previously made deals with Walmart for solar projects as early as 2010. Walmart had more than 200 solar projects by 2014, according to company press releases, and has as many as 240 today, according to the lawsuit.

Tesla's stock has been battered lately. Shares fell more than 15% at the end of July following disappointing second-quarter earnings from the company that made analysts question Tesla's path to profitability. The stock drop wiped more than $7 billion of market value from the company.

Related: Elon Musk Predicts Tesla's Future

Tesla is also trying to build up its solar-energy unit after its disastrous second-quarter earnings release. In the second quarter, the company reported the lowest number of quarterly installations for the unit. On Monday, Tesla said it would offer its solar-panels for rent for as little as $50 per month in some US states, and has plans to offer a similar product in Europe soon.

Tesla was down 32% year-to-date through Tuesday.

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