Tesla lost a key energy executive as it faces speed bumps in growing its consumer energy business.
RJ Johnson, who led the company’s energy operations since August, left Tesla this month for a renewable energy startup in stealth mode, electric-car website Electrek first reported.
Johnson also served as Tesla’s global head of commercial energy from March to August of 2020, according to his LinkedIn profile. Before that, he held various management positions at NextEra Energy Resources for nine years.
Johnson and Tesla did not immediately return requests for comment.
Tesla’s energy division sells various solar and energy storage products for consumer and business use. Homeowners can purchase a Powerwall, a large battery pack that stores electricity produced by solar panels for later use. Tesla also sells larger battery systems called Powerpack and Megapack for commercial customers.
Tesla also has a product called Solar Roof, a system of roofing tiles with integrated solar energy generation capabilities. However, its rollout has hit some snags as of late.
In April, Tesla told some Solar Roof customers that their roofs would cost tens of thousands more than they were initially quoted. Many would-be buyers have also reported nightmarish experiences with the company’s customer service. Solar Roof customers from several states have sued Tesla over the sudden price hikes.
On a conference call that month, Tesla CEO Elon Musk acknowledged that the company incorrectly estimated how much Solar Roof installations would cost and said customers would be refunded their deposits if they cancel their orders.
“Despite raising the price, the demand is still significantly in excess of our ability to meet the demand to install the Solar Roofs,” Musk said. “We did find that we basically made some significant mistakes in assessing the difficulty of certain roofs, but the complexity of roofs varies dramatically. Some roofs are to be literally two times or three times easier than other roofs. So you just can’t have a one-size-fits-all situation.”
Going forward, Musk said Tesla will only sell its solar-panel products combined with Powerwall.
In the first quarter of 2020, Tesla installed 92 megawatts of solar generation capabilities, a 162% increase from the prior year, and 445 megawatt-hours of storage capacity.
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A California judge will decide whether two complaints filed against Tesla will be combined into a single lawsuit, as plaintiffs across the US pursue a class action over Solar Roof price hikes.
Eight Tesla customers this week filed a complaint in US District Court in the Northern District of California, alleging the company violated California law by increasing the price after they’d signed contracts.
Tesla did not respond to an email seeking comment.
Judge Lucy H. Koh will decide whether to combine the two cases, according to a court order filed this week after the second California lawsuit.
That order was to be expected, since the cases were similar, said Brian Fitzpatrick, a professor at Vanderbilt Law School and author of “The Conservative Case for Class Actions.” Otherwise, he added, “multiple judges could end up reinventing wheels in similar cases.”
He said he expected the cases to be consolidated, after which there would be a “rigorous” process of discovery. Only then would a judge decide whether the case fits the requirements for class-action status.
“I doubt these cases will get to that point for at least another year,” Fitzpatrick said after reviewing the most recent filings.
The two California complaints came after a similar complaint was filed by a couple in New Hope, Pennsylvania. They said their contract had been increased to $78,352.66 from the original $46,084.80. Each of the three complaints sought class-action status.
The Pennsylvania couple’s attorney, Peter Muhic, of LeVan Muhic Stapleton, is also co-counsel on the new filing in California.
“We seek nationwide relief,” he said via email, noting that the suits included plaintiffs from California, Florida, Massachusetts, New Jersey, New York, and Pennsylvania.
In the newest complaint, the homeowners said Tesla raised the prices of their contracts – most by more than 50% – after they’d been signed. Tesla also told customers they would “risk losing their place in line” for an installation they didn’t “pay promptly,” according to the complaint.
One of the plaintiffs, Mattias Astrom, placed an original order in 2017 for a Solar Roof for his home in Lexington, Massachusetts. The complaint said he paid a $1,000 deposit, then waited three years for an installation. He cancelled the order in December 2020 without getting the roof.
Astrom entered a new order in January 2021, with a $100 deposit against a full price of $150,013, according to the complaint. In April 2021, he received an email from Tesla saying his price had been increased 52% to $228,008.
In Fullerton, California, Sol Kim signed a contract for a $39,658.44 project in February 2021. He refinanced his mortgage to fund the project. In April 2021, Kim got an email saying the price had increased to $52,337.30.
The Tesla project manager working with Kim told him that it “was a company-wide update to the pricing structure,” according to the complaint.
Tesla CEO Elon Musk in April addressed customer concerns, saying: “We did find that we basically made some significant mistakes in assessment of difficulty of certain roofs.”
In the complaint filed on Tuesday, the plaintiffs said the company used several methods to determine their roofs’ complexity during the ordering process.
The customers first plugged information about their homes into a Tesla website, then Tesla used a combination of aerial photos and on-site visits to identify “anomalies or unique shapes.” After that, the contract would be drawn up and signed, according to the complaint.
In Roslyn Heights, New York, Anupama Vivek paid a $1,000 deposit for a Solar Roof in April 2020.
In March 2021, Tesla notified Vivek that there would be a new $4,214 charge for roof preparation and pre-construction costs, bringing her total contract to $58,805.48, according to the complaint.
Less than a month later, the company increased the price to $77,333.03, according to the court filing.
The complaint said the company “knowingly marketed, advertised, and promised to provide and install its Solar Roof systems at prices that the company knew it would not honor and on delivery dates the company knew it could not meet.”
More than half a year after Philip Dahlin and Mary Arndtsen signed a contract with Tesla to install a Solar Roof on their home in New Hope, Pennsylvania, the couple received a message from the company.
Tesla said their price would now be $78,352.66, up from the $46,084.80 price they’d agreed upon.
“Our budget was based on the contract that we had, so it was not something that we had prepared for,” Dahlin told Insider this week via phone.
Dahlin and Arndsten in late April filed a lawsuit against Tesla in US District Court for the Eastern District of Pennsylvania. The suit said the tech giant was in breach of its contract. It also said the company violated consumer protection acts covering home improvement and trade practices.
An article in the Uniform Commercial Code allows buyers and sellers to modify agreements after they’re signed, said D. A. Jeremy Telman, a contracts professor at Oklahoma City University School of Law, after reviewing the Pennsylvania complaint and a lightly redacted Tesla contract.
“However, both parties must consent to the changes. That seems here not to have been the case,” Telman said.
Tesla was issued a summons on May 3, according to the Pennsylvania court. The company had not filed a response as of Saturday afternoon. An email from Insider wasn’t returned.
Elon Musk, chief executive, addressed customer concerns during the company’s Q1 earnings call in late April, saying, “We did find that we basically made some significant mistakes in assessment of difficulty of certain roofs.”
The lawsuit seeks class-action status
The Pennsylvania couple’s complaint said it would seek class-action status.
Their attorney, Peter Muhic, of LeVan Muhic Stapleton, said he’d heard from “numerous” homeowners in situations similar to Dahlin and Arndtsen. He declined to give a specific number.
“They advertise a very unique product that they claim is much better than other competing products,” Muhic told Insider on Thursday. “And we believe that they need to honor their contracts, and they have to perform as they had promised and agreed.”
Muhic would have to file a motion to have the case formally certified as a class action. The complaint said there are more than 100 potential class members who had signed contracts totalling more than $5 million.
A copy of a Tesla Solar Roof contact filed alongside the complaint included an arbitration agreement between the parties. That clause could be a roadblock for the case to gain class-action status, said Gregory Klass, associate dean and professor at Georgetown University Law Center.
“Tesla’s arbitration clause almost certainly forestalls this class action under current Supreme Court precedent,” he said on Friday, citing a 2011 case, AT&T v. Concepcion.
In the legal complaint, Muhic wrote that the arbitration clause would be struck down as invalid under Pennsylvania law, in part because of the way it had been formatted on the page. He wrote that the clause also “does not contain a separate line for each party to indicate assent.”
Connecticut homeowners say Tesla also raised their price
In Weston, Connecticut, Jay and Robin Fortin signed a contract in January to install a Solar Roof on their 1955 colonial home. They agreed on a price of about $62,000 in their contract, Jay Fortin told Insider on Friday. His wife signed the contract.
When a tech came to study their home, the price jumped up about $6,600, because Tesla would have to change the type of wood beneath their shingles, he said. Then, in April, the couple received a message from Tesla, letting them know the price had gone up to about $91,000.
“I’m not going to pay the new price,” Fortin said on Friday. “We can’t. The whole thing made sense for us because we needed a new roof anyway, and we wanted backup power.”
He later added: “I wish we hadn’t gotten involved with the whole thing, tell you the truth.”
Fortin said he reached out to Muhic after learning of the complaint. Fortin hasn’t taken legal action, but said he’d consider joining a class-action lawsuit.
In Pennsylvania, Dahlin signed the contract with Tesla for a total price of $46,919.20 on September 17, 2020, according to a copy filed with the court. The couple paid a $100 deposit. After subtracting the deposit and an energy rebate, they would owe $46,084.80 after the installation, according to the contract.
The couple refinanced their home, where they’ve lived since 2006, to pay for the project. The contract said the roof would be installed within 180 days.
“We were pretty excited about the prospects,” said Dahlin, who works in sustainability. “Also, just generating our own energy to charge the Tesla we already had, the car.”
During the following 180 days, the couple heard little from Tesla.
On March 24, the couple received an email from Tesla, saying: “We have increased the price of Solar Roof and have added adjustments for individual roof complexity.”
On April 23, they learned that the price had been increased to $78,352.66, according to their complaint.
Said Dahlin, “And then when we did get the email, it was a significant disappointment, obviously.”
Tesla CEO Elon Musk is going to shake up the way the company sells its solar panels.
In a tweet late on Wednesday, Musk said from next week, all sales of the company’s solar energy products will come together with its energy storage battery Powerwall.
“Solar power will feed exclusively to Powerwall. Powerwall will interface only between utility meter & house main breaker panel, enabling super simple install & seamless whole house backup during utility dropouts,” he said in a followup tweet.
Bloomberg reported this followed a complaint from Brett Winton, Director of Research at Ark Investment Management that his Tesla solar panels haven’t generated a “single watt-hour” since they were installed in January because he was waiting on his utility to approve the connection.
After Musk asked Winton if he had Powerwall he replied: “Hmm. Yes have powerwall. Everything right now is switched off; just awaiting LADWP [Los Angeles Department of Water and Power].”
Customers for Tesla’s Solar Roof product are reporting they’ve suddenly been hit with massive price hikes.
The Verge reported Monday that one customer for Tesla’s solar roof product signed a contract in February for a roof costing $35,000 plus $30,000 for the battery. The same customer later received an email telling him he would be receiving a new contract with the price hiked to $75,000 plus $35,ooo for the battery – a 69% increase.
Tesla has a solar panel installation programme that sits alongside its larger electric vehicle business. It offers two products, regular solar panels, which go on top of a customer’s roof, and the “Solar Roof,” which replaces a customer’s roof tiles with solar energy cells.
“We have increased the price of Solar Roof and have added adjustments for individual roof complexity,” the email said. It added the customer would be able to cancel his order and get his deposit refunded, and said Tesla would be “prioritizing customers based on the order in which they accept their updated agreements.”
This followed a report from Electrek this weekend that multiple Tesla Solar Roof customers had received the same email. Some of these customers had signed contracts over a year ago and been waiting for the installation, before being told they would have to pay more money.
One customer showed Electrek documents that they had agreed to a price of $77,000 nine months ago only to be told this week that the price is now $118,870.
Some had also already spent thousands of dollars in preparation, having trees cut down.
Electrek reported on March 29 that Tesla had dramatically increased its prices for its Solar Roof product. After receiving tips from customers, the publication compared a quote it had received for a 3,947-square-foot roof last summer by running the details of the same roof through Tesla’s price calculator. While Electrek had received a quote for $54,966 in summer 2020, in March it was quoted between $79,938 and $100,621 for the same roof.
Tesla did not immediately respond when contacted by Insider for comment.