Why Tesla Is Facing Legal Action Threats From Solar-Roof Customers

Tesla Inc. TSLA is facing the prospects of legal action from customers after the company sharply increased the price of solar roofs even for customers who have signed installation contracts over a year ago, Electrek reported Sunday.

What Happened: Customers were informed by Tesla of price increases of around 30% or more above the previous agreed-upon pricing, according to the report. The price increases also seem to apply to Tesla Powerwall installations, with the cost of those being hiked by about 30%.

Further, Tesla reportedly said it “will be prioritizing customers based on the order in which they accept their updated agreements.” This means customers could face more delays in solar roof installations if they do not sign the new agreements as soon as possible.

See also: How to Invest in Tesla Stock

A thread on the Tesla Motors Club also provided details about the massive price increases for the solar roof installations, with some of the customers indicating the possibility of legal action against Tesla.

According to the Electrek report, Tesla’s primary reason for increased prices is the “roof complexity” factor, which takes into account how difficult it would be to install solar on a particular home’s roof and will be factored into the final purchase price.

However, Tesla’s price hike does not seem to track accurately with either roof complexity or a recent price spike in construction materials, as per the report.

See Also: Is Tesla Testing New Solar Roof Panels?

Why It Matters: Tesla's solar business, born out of its 2016 acquisition of SolarCity, installs rooftop photovoltaics, carport and ground-based solar energy systems. However, Tesla has been slow with solar roof installations and customers have urged the company to improve its sales and customer service.

It was reported in October last year that Tesla was sued by a solar roof customer over allegations it misreported a Power Purchase Agreement (PPA) as a loan the latter had undertaken.

Tesla has also been accused of failing to communicate accurately with customers over fire risks in its solar installations. Retail giant Walmart Inc. WMT filed a lawsuit against Tesla in August 2019, claiming that "no fewer than seven" stores experienced a fire due to Tesla's solar panels. However, the companies settled their lawsuit in November 2019.

Price Action: Tesla shares closed almost 1% lower on Friday at $677.02.

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