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article imageTesla's solar facilities hit as Elon Musk tries to turn a profit

By Karen Graham     Jun 22, 2018 in Business
Elon Musk's move to cut nine percent of the Tesla workforce will sharply downsize the residential solar business it bought two years ago in a controversial $2.6 billion deal, according to internal documents and a few former employees.
The workforce cuts will hit the division that was once SolarCity — a sales and installation company founded by two cousins of Tesla CEO Elon Musk.
According to internal documents viewed by Reuters, about a dozen facilities, (one email mentioned 14 and another list mentions 13), have been targeted for closure, leaving 60 facilities open.
The documents also include ending a retail partnership with Home Depot that current and some former employees said generated about half of its sales. Seeking Alpha surmises that in his attempt to salvage production of the Model 3, Musk appears to be putting the solar segment of Tesla on the back burner for awhile.
Tesla declined to comment on which solar facilities would be closed, how many employees would lose their jobs or what percentage of Tesla's solar workforce they represent.
The company did say the cuts to the energy team, including batteries to store power, were in line with Tesla overall plans to cut its staff by nine percent.
"We continue to expect that Tesla's solar and battery business will be the same size as automotive over the long term," the company said in a statement to Reuters.
What's the strategy?
According to CNBC, the facilities targeted for closure were located in California, Maryland, New Jersey, Texas, New York, New Hampshire, Connecticut, Arizona, and Delaware.
Tesla chief Elon Musk said a company reorganization aims to speed up production of the Model 3  a ke...
Tesla chief Elon Musk said a company reorganization aims to speed up production of the Model 3, a key to expansion of the electric carmaker
Dozens of solar customer service staffers at call centers in Nevada and Utah were also fired, according to former employees, some of whom were terminated in last week's cuts. "It's been a difficult few days — no one can deny this," a Tesla manager wrote in a separate internal email, sent to customer service employees shortly after the cuts were announced.
As for the total number of job cuts, it is difficult to know right now. At the end of 2015, Solar City had about 15,000 employees, but thousands have lost their jobs.
Tesla says ending the Home Depot partnership part of the company's larger effort to absorb SolarCity into its high-end brand and sell through 90 of its 109 retail stores and its website. "Tesla stores have some of the highest foot traffic of any retail space in the country," Tesla said.
Powerwall charges with energy produced by solar panels  making that energy available when needed  da...
Powerwall charges with energy produced by solar panels, making that energy available when needed, day or night. Powerwall also enables your solar panels to produce energy during grid outages.
But financial analysts are questioning Musk's plans for the solar business. "In effect, they seem to be saying, We have no strategy for selling solar," said Frank Gillett, an analyst at Forrester Research, adding that the SolarCity purchase "looks pretty awful right now."
Seeking Alpha's John Engle says: "Several Wall Street analysts already assign little to no value to Tesla’s energy business; Musk may, at last, agree with them."
And Engle could be on to something, here. Elon Musk has been so wrapped up in straightening out the production mess with the Model 3, the solar business was left to sink or swim.
In the first quarter of 2018, Tesla installed 76 megawatts of solar systems. This was a big drop from SolarCity’s more than 200 MW a quarter in early 2016. But back then, Solar City was a leading player in the solar industry. But in its first-quarter report this year, Tesla said they expected solar deployment to grow later in the year.
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