Tesla resolves Justice Department inquiry for $29.5 million

With all the things that Tesla has going on – not the least of which are gigafactories and product launches including affordable EVs and Solar Roofs – the last thing that it needed was an investigation by the federal government. And yet with last year’s acquisition of SolarCity, the company also inherited a dispute over the amount SolarCity had sought under a now-expired federal program to claim the Investment Tax Credit as a cash grant.

That investigation was finally concluded last week in a settlement under which Tesla has agreed to pay $29.5 million to the federal government, without admitting fault. This puts an end to over five years of a byzantine legal dispute over the proper method for calculating the value of PV systems.

As a side note, while it may no longer have these specific legal implications, a look at the quarterly results of any third-party solar company will show that the methodologies of how much to value these systems at and how to report this is certainly not consistent.

And as Tesla/SolarCity was and remains the largest residential solar installer in the country, the volume of claims here was not small. A Justice Department press release references “thousands of claims” which it believes were inflated, starting when the cash grant program under Section 1603 went into effect in 2009.

One significant factor which may have brought the federal government to the table was the filing of lawsuits by two investment funds affiliated with SolarCity over claims that the federal government was underpaying under the cash grant program, which expired at the end of 2016. Tesla will also release any other claims for additional payments under the program.

The end result is that Tesla gets off the hook for a modest sum, and the federal government gets to send a message that it will not allow these programs to be gamed.

“This settlement sends a clear message that, working with the Department of Justice and the Office of Inspector General, Treasury will pursue any fraud or abuse in programs that it administers in order to protect the taxpayer,” declared U.S. Treasury Fiscal Assistant Secretary David A. Lebryk.

Back to gigafactories.