Tesla’s efforts to scale back its workforce will significantly impact its solar roof business. Its 9 percent staffing cut reportedly translates into the closing of roughly a dozen facilities in the United States. The company got into selling photovoltaic shingles after acquiring SolarCity for $2.6 billion. At the time, Tesla CEO Elon Musk, who previously served as chairman of SolarCity’s board of directors, called the purchase a “no brainer.”
The theory was that the new business would be synergistic. Customers could accumulate energy through solar roofs, store it in a Tesla Powerwall, and use it to recharge their vehicle, power their home, or supplement their energy needs during peak hours. But earlier this month Tesla announced it was pulling those products out of stores and abandoning its partnership with Home Depot. Customers will now buy their solar energy products through Tesla stores and the company’s website.
What happened?
“In addition to this company-wide restructuring, we’ve decided not to renew our residential sales agreement with Home Depot in order to focus our efforts on selling solar power in Tesla stores and online,” Musk said at the time. “The majority of Tesla employees working at Home Depot will be offered the opportunity to move over to Tesla retail locations.”
It was a bizarre decision, as Tesla had just announced plans to open mini solar stores in 800 Home Depot locations (aimed at popularizing the technology) a few months earlier.
According to a report from Reuters, an internal company email named 14 solar installation facilities slated for closure. When questioned, Tesla didn’t specify which sites were in jeopardy but noted that the energy team would be equally affected by the 9-percent staffing cuts. “We continue to expect that Tesla’s solar and battery business will be the same size as automotive over the long term,” the company explained.
Layoffs are commonplace in any industry, but the fact that Tesla’s culling its solar arm so quickly after planning its expansion calls into question its current financial status. It’s no secret that a lot of money is going toward the Model 3. Production targets have not been met, and Musk and company are pulling out the stops to remedy that. The automaker has even gone so far as to assemble an outdoor assembly line.
Meanwhile, investors are becoming antsy after several months of bad press. A round of accidents involving Autopilot has everyone on edge; meanwhile, the Model 3 can’t seem to reach those pesky targets (and another one looms at the end of June). Some industry watchers speculate that Tesla needs to free up money if it’s to make it through the rest of 2018. Tesla’s solar business could become a sacrificial lamb, bled so the firm’s car business can propagate without hunting for fresh capital.
Not that the solar business is all that hot right now. In the first quarter of this year, Tesla installed 76 megawatts of solar systems. During the first quarter of 2016, SolarCity installed at least 200 megawatts.
Tesla certainly doesn’t want to liquidate its solar business if it doesn’t have to. It has far too many commitments. For example, Tesla has held plans to set up a new solar factory with Panasonic in Buffalo, New York. It also has an agreement with the state requiring it to spend $5 billion within 10 years. If it fails to do so, it will be subject to all manner of financial penalties and severely bruise its relationship with both the State of New York and Panasonic.
While the firm claims it’s on track to meet those commitments, the overall strategy for Tesla’s solar arm is perplexing. In addition to abandoning the partnership with Home Depot, Tesla also ditched SolarCity’s marketing model. If you live in a metropolitan area, you probably recall seeing the company’s green vans and street teams educating potential customers about the environment and how to reduce their home energy costs. Those aspects are gone; salespeople are no longer allowed to hold local events or purchase online leads — something its rivals still do.
Likewise, the Home Depot partnership may have been expensive, but it was also a good way to familiarize the public with the brand. A former Tesla employee stated that, despite being such an expensive venture, it contributed the majority of the company’s revenue. If that’s accurate, the future prospects of the business look bleak.
Hopefully, the cuts and closures serve to refocus the automakers’ other businesses in a way that will ultimately make them more profitable. No one can fault Tesla for wanting to focus on cars, but it has billions tied up in its alternative energy solutions. Unless its money issues are far worse than imagined, it shouldn’t throw them to the wolves. But the cuts and closures are still coming.
Solar installation offices targeted for shuttering are located in California, Texas, Arizona, Maryland, New Jersey, New York, New Hampshire, Connecticut, and Delaware. The company also removed some staff from its call centers. SolarCity was estimated to have employed roughly 15,000 prior to Tesla’s acquisition, though that number has fallen quite a bit since then.
[Image: Tesla]
Tick…tick…tick
The solar business runs on subsidies, and Trump has bowed down to oil, gas and coal.
Subsidies are falling, but solar is getting cheaper and adapting in response. In any case, that has nothing to do with Tesla’s troubles.
Sweet, new record comment number 2 and Trump is mentioned. He is mean cause he won’t give taxpayer money to failing businesses
Well our fearless leader put a tarrif on solar panels made in China to boost US panel makers. Unfortunately, there are no US panel makers, but there are about 260,000 Americans employed in the solar industry, mostly in install. Approximately 30-40,000 now stand to lose work. So much winning!!!
First Solar and its manufacturing facility in Ohio would beg to differ.
Very, very late to this party, but they indeed are expanding, hiring anywhere between 100 and 300 new workers, if memory serves, once the expansion is complete.
The tariffs on imported solar panels are a bigger issue than subsidies. Oddly enough, we still have mandates and subsidies for corn based ethanol use. Hmmm, why is that?
I posted about this yesterday.
PT Barnum Musk’s Big Top Circus is about fall in on itself.
There will also be major shareholder and vendor litigation regarding Solar City and Musk’s relations with family members, and co-mingling of Tesla and Solar City boards and interests – Musk is running a major scam that is catching up with him now.
DeadWeight
June 22nd, 2018 at 12:41 am
BREAKING NEWS: PT Barnum Musk is closing all of Solar City’s operations in 9 states and ending its affiliation with Home Depot (that accounted for 50% of all revenues).
Sh!t’s about to get real, real fast, for The Great Ponzi that is Solar City, and also, for the overhyoed, extremely overvalued sh!tshow that is Tesla, and Carnival Barker Musk.
June 22, 2018 / 12:14 AM / in 3 hours
Exclusive: Tesla to close a dozen solar facilities in nine states – documents
Nichola Groom, Salvador Rodriguez, Kristina Cooke
LOS ANGELES/SAN FRANCISCO (Reuters) – Electric car maker Tesla Inc’s move last week to cut 9 percent of its workforce will sharply downsize the residential solar business it bought two years ago in a controversial $2.6 billion deal, according to three internal company documents and seven current and former Tesla solar employees…
https://www.reuters.com/article/us-tesla-solar-exclusive/exclusive-tesla-to-close-a-dozen-solar-facilities-in-nine-states-documents-idUSKBN1JI013
This was 100% telegraphed in the Tesla earnings call when they said the reduction in labor wasn’t going to be coming from the car production area.
SolarCIty continues to whither as an unnecessary acquisition that distracted TESLA from their core products.
Musk should be fired if not in jail for the breach of ethics in buying out his cousin’s (and his) failing company to prop it up, when there was literally zero justification for it for the good of Tesla as a company.
And of course how could Elon be wrong, so the shareholders loved it.
Solar shingles, Powerwall storage, Tesla cars. Money for nothing and your chicks for free.
@indi500fan
At first I read that as “POWERBALL” storage and thought…
Maybe that’s the best idea Musk has had yet! Just keep buying powerball tickets.
Powerball tickets should be part of any diversified portfolio.
Weird, I’ve just seen the Tesla displays popping up in Home Depots this past week. Guess they’re going to go away soon.
Move along folks, nothing to see here.
Solar power notwithstanding, if my house was lit up like that at sunset there’d be several choice words barked out in a delightful and beguiling slight Irish accent.
Agreed. The most cost effective energy conservation strategy is to turn off equipment when it is not needed. That’s step one. Waste like that annoys me to no end.
I feel some regret that a clean future cannot be closer. I know, that sentiment probably makes me a far left communist these days.
It actually does. People are lamenting the reduction of subsidies meant to change behavior, which have no place in a free society. Marxists are always dumber than markets. Their evil does give them an edge over good people in endeavors where guile can be leveraged though.
Marxists are always dumber than markets….really? Not defending Marxism but the reality is sometimes the market need some prodding to move in a better direction. By “better” I mean for everybody, not some opportunistic fat cat. Look at cars – if you think the market would have – all by itself – provided vehicles as clean and safe as they are today, well, then you are delusional. There is a reason we have a mixed capitalistic society. A shame it is now running hard in the wrong direction.
“When fascism arrives, it will be in a flag covered box and draped with a cross” not verbatim but never have truer words been spoken.
“Marxists are always dumber than markets….really? Not defending Marxism but the reality is sometimes the market need some prodding to move in a better direction.”
Yes. Absolutely always. The European diesel emission crisis is the direct result of imbeciles who think they are smarter than markets, people so insipid that they don’t see this as a teachable moment. They still think that some complete stain on humanity who wants nothing so much as to make decisions for others should have domain over people who are busy creating value and providing for their families. Marxism killed over a hundred million people in the last hundred years, and you are still all-in. If you want to make the world a better place, stop being an instrument of pure evil.
Preferring less pollution over more pollution, all else being equal, now makes one a dumb marxist?
“From each according to his ability, to me according to my needs” – Bernie “Mein Kapital” Sanders
Really dumb, if you think energy that must be subsidized consumes less resources than energy that is inherently inexpensive.
Not a far left communist, but there’s likely some cognitive dissonance involved. If you truly regret your wasteful western life, live as cheaply as possible – not as cheaply as is convenient – and set an example for others.
Apart from that, there’s not much to regret. We simply don’t have the technology to live our luxurious lifestyles without consuming massive amounts of resources, and wasting additional resources on greenwashed technology that may someday become feasible doesn’t help.
Why, a Mi-Grid system is far more capable than this unit from Tesla and isn’t much different in price.
every Walmart in the Southwest should be covered in solar panels. Plenty of intense sun, no trees. inelastic electricity demand.
A homeowner in Massachusetts? They’re probably better off spending that money on better insulation, doors, windows and heated floors. maybe geothermal HVAC.
We’re not at the level yet where solar panels make sense for everyone, everywhere.
Solar works well here in Massachusetts. I know several people with panels and they are doing well. Lots of homes have panels on the roof. Solar farms are opening up as well. My utility is building its second one now.
Here, it makes sense economically if you live in a town without municipal power and are paying high rates. Most of the municipals are cheap enough that it doesn’t work out.
WalMart is working on it:
https://pv-magazine-usa.com/2018/04/23/walmart-to-host-solar-power-on-130-more-sites/
mm – good energy strategy means looking at all opportunities and choosing the ones that have the best payback first. So, for a cold weather state like MA, you are correct that thermal barrier projects would be the best place to start. Does not mean that solar has no place but not necessarily the best first option….
Solyndra is a green energy success story.
There are 2 Tesla stores on Long Island NY. There are 20 Home Depots, including one 10 minutes from my house. But convenience and public exposure are overrated.
Solar City (now Tesla Solar) has no distinct competitive advantage over other solar equipment installers. A huge company with thousands of employees and no competitive advantage is a financial ticking time bomb.
People are not stupid. They’re not going to invest in home solar panels that take 8 or 10 years to pay back. Hollywood doesn’t make a movie because it will pay pack in 10 years, for example.
For solar to really take off, it needs to pay back in 2-3 years, as compared to normal, fossil-fuel electric rates, not rates artificially jacked up by utilities to encourage adoption of alternative energy.
“People are not stupid”
Sir, do you really want to argue this point?
I present my counterpoint as Exhibit A: this society.
Things aren’t going well for Tesla. Time for Elon Musk to distract the media by announcing that he’s digging a tunnel to the moon or something.
(voice of Gomer Pyle) “surprise! surprise! suprise!”
Tesla is simply the most elaborate ponzi scheme conceived. It is the Bricklin, the DeLorean, and the Dale all on steroids. Promises half arsed kept. Pathetic overreach into pomposity and to arrogance.
Instead of concentrating on a core product of Tesla batteries, wall units, and charging and just automobiles, this company is into space, worm tubes, and laughable fake tractor trailer rigs.
And it still can’t build a quality car. I watch youtube videos of the blivetheads who buy these and nearly make love to them and I see poor panel fit, excuses for things that don’t work or aren’t functional, or the company intentionally releases its latest car with brakes almost as bad as a 1950’s Nash!