Tesla Could Face Class-Action Lawsuit For Drastic Solar Roof Price Increases

Illustration for article titled Tesla Could Face Class-Action Lawsuit For Drastic Solar Roof Price Increases

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Over the past month, multiple outlets have reported that Tesla has been jacking up Solar Roof installation prices after agreeing to contracts with homeowners. Customers informed of the changes are free to decline the new rate, but one Pennsylvania couple has filed a lawsuit against the company for breaching its contract with an eye toward formalizing it as a class action.

Philip Dahlin and Mary Arndtsen of New Hope, Pennsylvania agreed to have Tesla install its Solar Roof tiles on their home in September 2020, Insider reported on May 9.

Their story follows the same pattern as many others. The price in the contract, signed last fall, was $46,084.80. Then, on March 24, Tesla notified the couple of an upcoming pricing change, citing “adjustments for individual roof complexity,” before revealing the revised price on April 23: $78,352.66.

Three days after Dahlin and Arndtsen learned of the $32,000 hike in the price for their roof, Tesla CEO Elon Musk addressed the pricing revisions in the company’s first-quarter earnings call amidst a flurry of reports of drastic last-minute adjustments:

“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 literally two or three times easier than other roofs. So you just can’t have a one-size-fits-all situation. If a roof has letter protuberances or if the core structure of the roof is rotted out or is not strong enough to hold the solar roof, then the cost can be double, sometimes three times what our initial quotes were.”

According to the couple’s suit, there are more than 100 potential class members, covering more than $5 million in contracts Tesla had with homeowners. However, Insider reports that an arbitration clause included in Solar Roof installation contracts may impede the case’s class-action eligibility:

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, [Dahlin and Arndtsen’s lawyer Peter] 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.”

What makes this all very strange is that in October 2019, Tesla introduced its V3 iteration of its Solar Roof tiles that were supposed to drop the price by virtue of being cheaper to produce and faster to install. Early quotes of V3 systems seemed to come in anywhere from a few thousand to tens of thousands less than what comparable V2-based systems would have cost.

Evidently, those quotes were gravely wrong, at least in part because they didn’t account for differing complexities of certain roof designs. Tesla has historically cautioned prospective customers that it may need to raise the agreed-upon installation price after conducting an on-site assessment of a home, though the amount of that adjustment varies. One customer in The Verge’s story who’d already signed a contract for a $69,000 roof budgeted between another $5,000 and $10,000 to cover a potential increase; he was later informed the new price would be $104,000.

Tesla’s online configurator recently added a field for “roof complexity” within the last several weeks, allowing customers to perhaps see a more accurate quote depending on whether they have a “simple,” “moderate” or “complex” roof.

On April 21, Musk announced on Twitter that Tesla would be including its Powerwall home backup battery with all future Solar Roof installations — perhaps to make the price increases a bit more tenable to some buyers. Powerwall’s price also varies; including installation it typically falls between $9,000 and $15,000.

Tesla was issued a summons on May 3 by the U.S. District Court for the Eastern District of Pennsylvania. As of Saturday, the company hadn’t yet responded.

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