Blog Tesla Job Cuts Hit Solar Business

Tesla’s residential solar business will suffer layoffs related to the company’s plan to slash its workforce by 9 percent. A report from Reuters says more than a dozen of the company’s instillation facilities will be closed.

Tesla’s solar business was established two years ago with the $2.6 billion purchase of SolarCity, a sales and installation company founded cousins of Tesla Chief Executive Elon Musk.

Tesla declined give specific figures on how many employees would be impacted or which instillation facilities would be closed. However, an internal email reviewed by Reuters said offices targeted for closure are located in California, Maryland, New Jersey, Texas, New York, New Hampshire, Connecticut, Arizona, and Delaware.

When Tesla announced a plan for layoffs earlier this month, they also announced the end of a retail partnership with Home Depot for Tesla Energy products.

“We continue to expect that Tesla’s solar and battery business will be the same size as automotive over the long term,” Tesla told Reuters in a statement.

 

[Barklikeadog]

ending the home depot deal? wtf? how are they going to hold up their end of the deal with panasonic?

 

[hcsharp]

Funny they didn't mention Vermont because they laid off the entire crew from So Burlington VT. I don't understand how it's going to save them any money because they're now sending employees up from Boston to service VT customers. This seems absurd because the Boston crew has to get paid to travel a lot farther and they were paid more to begin with. Makes no sense. I ordered a Powerwall recently through my utility and I just received an email stating that instead of having to wait about 2 weeks for the energy rep to visit my home, now I should expect to wait up to 2 months.

 

[Barklikeadog]

Funny they didn't mention Vermont because they laid off the entire crew from So Burlington VT. I don't understand how it's going to save them any money because they're now sending employees up from Boston to service VT customers. This seems absurd because the Boston crew has to get paid to travel a lot farther and they were paid more to begin with. Makes no sense. I ordered a Powerwall recently through my utility and I just received an email stating that instead of having to wait about 2 weeks for the energy rep to visit my home, now I should expect to wait up to 2 months.

They are going to have some tough questions from investors soon. How to you go from installing 200+ MGW to 76MGW, lay off 20% of your installers, yet declare
that it will rebound significantly in the 2nd half of this year??! The new York deal on top of that is going to make this get ugly.

 

[PeterHG]

Sorry to see folks terminated, but let's hope they are changing their solar management. I tried to buy my solar from Tesla (twice), but the local competitors ran circles around them.

 

[Innovo]

Sorry to see folks terminated, but let's hope they are changing their solar management. I tried to buy my solar from Tesla (twice), but the local competitors ran circles around them.

I agree with the service issues. I'm building a home and am getting quotes before the close date. Other companies are giving me quotes but Solar City rep said we cannot do anything until we have one month of billing. Well, if I wait a month then I won't have the panels up in time to get the credit for this year, which I must have. I will get my panels somewhere else other than Solar City/Tesla Energy.

 

[TheTalkingMule]

The bulky, expensive operation SolarCity built is not the way Elon like to work, so it's being dismantled. $3.25+/W is an absurd price point in 2018. Let the Sunrun's and Vivint's of the world take on that role.

If Tesla is going to install solar nationwide moving forward, they will probably only do so at scale and as part of a lean game changing online offering.

They could also get out of the residential install business altogether to focus on storage and aggregation services for homeowners. Rooftop solar is quickly becoming a reliable commodity, maybe they don't need to go up on roofs at all. Maybe they just certify select installers for the Powerwall and host your neighborhood electricity blockchain.

 

[Barklikeadog]

They are going to have some tough questions from investors soon. How to you go from installing 200+ MGW to 76MGW, lay off 20% of your installers, yet declare
that it will rebound significantly in the 2nd half of this year??! The new York deal on top of that is going to make this get ugly.

what did anyone find funny about this remark??

 

[TheTalkingMule]

How to you go from installing 200+ MGW to 76MGW, lay off 20% of your installers...

Where did they say 20% of installers, or really any installers? What I read was 13 of 73 locations are closing, with large layoffs and some personnel moving to other locations. The plan since purchase was to shut down the door-to-door sales operation, so to me this sounds like unprofitable fringe market expansion(like Vermont noted above) is being reigned back in and sales expense is being eliminated on all fronts. From an investor standpoint this is precisely what you should want.

SunRun and other big installers are doing precisely what SCTY used to do and what made them sink in the end. Over spending to gain share(or in SCTY's case expand the domestic residential solar market somewhat altruistically). We're past that now and need to focus on getting lean and scaled.

...yet declare that it will rebound significantly in the 2nd half of this year??!

I'd be very interested in a link to any comments from Elon to this effect. Are you saying the Energy potion of TSLA is projected to double or the legacy SolarCIty residential solar piece? Energy itself could very easily double. Grid scale projects and Powerwalls are in high demand with fat margins. Residential is in mid-rebuild mode. #trusttheprocess

 

[electracity]

SunRun and other big installers are doing precisely what SCTY used to do and what made them sink in the end.

No, Sunrun doesn't install. They pay sales people on commission. They took a smart approach that reduced risk. Solarcity fails because its an inefficent business model. Tesla Energy, on the other hand, should do well if Musk has learned why Solarcity didn't work.

Solarcity's fate was sealed from the beginning. A national company can't make money doing light residential construction installing a commodity product.

 

[electracity]

what did anyone find funny about this remark??

He's a "Musk Quoter". He quotes Musk as evidence to the veracity of Musk's statements. It's a nice safe circle of non-thinking.

 

[TheTalkingMule]

Tesla will make quite a pile of cash on the residential side, perhaps from inverter out or perhaps the whole thing. We'll see what Elon decides. As it gets easier to slap up panels, they might as well do that part too.

SunRun is just a worse example of the SolarCity model. The only reason it's alive is by riding the coat tails of sctys market expanding work. These bloated sales-based models will be crushed in phase 2 of US solar. They rely on $6k of sales cost that no one in their right mind will pay moving forward.

 

[electracity]

Lets see how sunrun is doing:

RUN Interactive Stock Chart | Sunrun Inc. Stock - Yahoo Finance

 

[TheTalkingMule]

They'll do just fine.....within phase 1. So was SolarCity.

 

[xav-]

The Solarcity bailout was a major mistake. Tesla shares would probably be at least $400 or $500 now without that. I said it at the time...

At a minimum even if you agree with the bailout please don’t tell me that paying over $2 billion dollars for the equity of a company whose bond were yielding 20 percent is not shady, especially when you are a major shareholder of the company yourself and the other major shareholder of the company is your cousin.

I call that shady. Do I like Musk of course I do. Do I love my tesla model 3 of course I do. Do I blindly follow everything that Elon musk say? No

And I really wish that Solarcity deal did not happen. I do not like as a Tesla owner/shareholder to see tesla and its shareholders for being used as the piggy bank of Solarcity and SpaceX.

 

[Plug Life]

shady

LOL

 

[TheTalkingMule]

Barely any growth in the renewable energy business.

 

[Barklikeadog]

The Solarcity bailout was a major mistake. Tesla shares would probably be at least $400 or $500 now without that. I said it at the time...

At a minimum even if you agree with the bailout please don’t tell me that paying over $2 billion dollars for the equity of a company whose bond were yielding 20 percent is not shady, especially when you are a major shareholder of the company yourself and the other major shareholder of the company is your cousin.

I call that shady. Do I like Musk of course I do. Do I love my tesla model 3 of course I do. Do I blindly follow everything that Elon musk say? No

And I really wish that Solarcity deal did not happen. I do not like as a Tesla owner/shareholder to see tesla and its shareholders for being used as the piggy bank of Solarcity and SpaceX.

2 billion? The price tax is going to come in at 5 billion.

 

[EinSV]

They are going to have some tough questions from investors soon. How to you go from installing 200+ MGW to 76MGW, lay off 20% of your installers, yet declare
that it will rebound significantly in the 2nd half of this year??! The new York deal on top of that is going to make this get ugly.

The reason I marked this as a funny is that it is hogwash.

Solar City had two major problems -- a very large sales force and infrastructure that was expensive to maintain and a business model where most of its sales came from long-term leases where it was paid over very long periods of time. Tesla has been very transparent that they want to cut costs especially from the Solar City sales side to generate profits. In the current round of cost cutting, they are doing so by reducing the sales force and presence in places like Home Depot, while using the internet and existing Tesla stores which now have beautiful Tesla energy displays.

By reducing the sales staff and infrastructure at the same time it is accelerating payment for solar systems by, for example, increasing the percentage of systems sold versus leased, Tesla has a business model with drastically reduced costs and increased cash flow. It is a business model that is set up to optimize cross marketing of solar and storage to EV customers who for obvious reasons buy a ton of solar and are also increasingly likely to buy storage to pair with solar, and vice versa. Having one-stop shopping to buy all of those products should be very efficient and make for great cross-selling.

In other words, leveraging the existing Tesla infrastructure to sell solar and storage is much more efficient than the old bloated Solar City sales structure.

Bottom line: investors love cost cutting, and most should understand the need to change the Solar City business model to generate faster cash flow, while sacrificing sales in the short term. This is one of the many steps Tesla has taken to become cash flow positive and profitable later this year. Should be very painful for short sellers.

 

[NuShrike]

Meanwhile from Business Insider:
"Tesla has left salespeople confused over when customers will get the Powerwall and solar roof"