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

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Whistleblower Steven Henkes alleges that Tesla and Solar City failed to disclose a fire risk in its solar panels, which sparked an SEC investigation. The former Tesla Field Quality Manager and his attorney Robert Wallace join Yahoo Finance Live to discuss the allegations.

Video Transcript

- Welcome back, everybody. Tesla is facing an SEC probe over what it told investors about its solar panels. Yahoo Finance's Alexis Keenan here now with some very special guests. Alexis.

- Hi, Alexis. Thank you. I have with us here Robert Wallace, who is an attorney in California on behalf of Steven Henkes. He's also joining us. He's a former Tesla field quality manager, who blew the whistle on Tesla and filed complaints with regulators over its solar panels. So welcome to both of you. Thanks for being here.

- You're welcome.

- Thank you for having us.

- All right. Robert, I want to start with you. This all started with Steven's complaint to authorities back in 2019 while he was still working at Tesla as a field quality manager, as I understand it. And that's I think a type of engineer, but you can correct me if I'm wrong. And he later was fired over that. So how did that incident get us to where we are today learning that the SEC is looking into Tesla solar panels? And that we're learning that through you, not through Tesla.

ROBERT WALLACE: Yeah. Well, it really began with Mr. Henkes' employment at Tesla. He was originally hired at Circuit City in 2016 before the merger and the acquisition. After the merger and acquisition was concluded, it became apparent that Mr. Henkes job duties were expanded. And he became aware of the solar panel issue and the safety issues connected with it at that time. So it was actually going back to 2017.

He tried to work internally with Tesla to get the problem resolved. And when he was not satisfied, that's when he filed the SEC and the Consumer Product Safety Commission complaint jointly in April of 2019. That's the background.

- And so Steven, I want to go to you next. Now, we've known for some time that Walmart and others have sued over these solar panel fires. Also, the US Consumer Product Safety Commission looking into these reports based on your complaint. But when do you say is the earliest time that Tesla or SolarCity knew that these panels could cause harm? And does your job-- did your job at that time-- give you any sort of insight as to why that could be?

STEVEN HENKES: You make a very good point. First and foremost, I just want to explain that this is a public safety issue. And everyone has a right to a safe domicile and a place to congregate, including to go shopping. So first and foremost, my main intent is to protect the public and to protect families in their homes. So as Robert explained, in 2017 in December, I became aware of the particular issue, in the scope of the issue. And I was made aware through internal documents third party engineering reports that Tesla/SolarCity knew about this problem well before 2017.

- OK. And can you be more specific? What exactly caused you to reach the conclusion that these solar panels were dangerous?

STEVEN HENKES: 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. Not only that, my responsibility was to engineer and develop the method for remediation and remanufacturing in the field and also starting up with manufacturing lines.

- Now, Steven, Tesla has different types of solar panels. So was this one type, in particular, was this a rooftop panel ground-based or carport solar?

STEVEN HENKES: Yes. Families know and also as the businesses know who experienced thermal events, this is particularly like what you're showing there on the screen, retrofit solar. It's traditional solar panels that were installed from 2015 all the way through late 2018.

- OK. And also, we've reached out to Tesla for comment on this issue. And we've not heard back yet. But the company has said in the past that its maintenance that was needed in order to rectify any alleged problem here. So why or why isn't maintenance enough in this case, as you see it?

STEVEN HENKES: Alexis, this is a corporate culture who puts reputation over safety, over public safety. I want to be very clear about that.

ROBERT WALLACE: Let me add as well that another component of Mr. Henkes' current lawsuit, which I'm representing him is that the remediation efforts that you're referring to are not sufficient. 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. So the problem is Steven originally complained about a [INAUDIBLE], but which he was fired for, is ongoing.

- Well, we're going to have to-- thanks, guys. We're going to have to leave it there. I just want to mention that the SEC has also said that just because it has an inquiry doesn't mean that they have come to any conclusion on illegal activity or any wrongdoing by either company. I'm going to send it back to Alexis now. Robert and Steven, thank you so much for being with us.

- All right. Thanks gentlemen for that. Thank you, Alexis Keenan for bringing that to us.