Tesla Solar Hit With Layoffs, Home Depot Deals Ends, 14 Sites Closing

JUN 22 2018 BY MARK KANE 66

Around one and a half years after the acquisition of SolarCity, Tesla is still restructuring its solar business, which again will be hit by layoffs (as part of the previously announced 9% workforce cuts), according to Reuters.

Red Tesla Model X and Tesla Solar Roof

Tesla Solar Roof (Textured Glass)

The acquisition of SolarCity was in 2016 described by Elon Musk as a “no-brainer”, but there were shareholders reporting objections and doubters calling it a bailout.

Tesla first resigned from the previous practice of door-to-door sales for SolarCity and apparently dismissed thousands of employees. It then focused more on the sales of solar instead of leases and now it seems that SolarCity will continue its adjustments by ending its partnership with Home Depot, which put SolarCity in some 800 stores.

Another step will be to close a dozen solar facilities in nine states (California, Maryland, New Jersey, Texas, New York, New Hampshire, Connecticut, Arizona and Delaware).

“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.

The latest cuts to the division that was once SolarCity – a sales and installation company founded by two cousins of Tesla CEO Elon Musk – include closing about a dozen installation facilities, according to internal company documents, and ending a retail partnership with Home Depot Inc that the current and former employees said generated about half of its sales.

About 60 installation facilities remain open, according to an internal company list reviewed by Reuters. An internal company email named 14 facilities slated for closure, but the other list included only 13 of those locations.”

It’s expected that with less sales channels, sales of panels and the Solar Roof will be affected, but maybe profitability will increase, which seems to be a major task for Tesla ahead of Q3 and Q4.

Because of the latest rumors, some analysts questioned Tesla and the previous acquisition of SolarCity:

“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.”

Tesla Solar installations:

  • 2016-Q4: 201 MW
  • 2017-Q1: 150 MW
  • 2017-Q2: 176 MW
  • 2017-Q3: 109 MW
  • 2017-Q4: 87 MW (down 47% year-over-year)
  • 2018-Q1: 76 MW (down 49% year-over-year)

Source: Reuters

Categories: Tesla

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66 Comments on "Tesla Solar Hit With Layoffs, Home Depot Deals Ends, 14 Sites Closing"

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Dav8or

I noticed almost immediately after Elon announced ending the deal with Home Depot, that the sales people for Tesla at my Home Depot disappeared. They left the floor display of the Power Wall and a solar panel, but nobody can answer any questions about it. It really feels like it is abandoned there. The little booth/table thing with the red Tesla logo is gone though.

EVShopper

Maybe you can buy the display models for cheap.

Dav8or

I’m pretty sure they are dummy units and not functional.

Doggydogworld

SCTY was at 250 MW per quarter before the deal was announced. They started scaling down immediately and had already laid off a couple thousand people by the time it closed in Q4 of 2016.

Nix

Yes. they were delivering large amounts of product, but not making money. The old business model was broken and had be be changed.

That is what happens with pretty much every single corporate acquisition.

Nix

I’m not sure why this story leaves out that Tesla is moving Solar sales to their existing Tesla automotive sales centers in order to align sales with affluent brand new EV car buyers who clearly already show interest in green energy. Instead of trying to chase DIY’ers who are just trying to buy some power tools or some other non-solar purchase around home depot with flyers.

Tesla is actually transferring many of the Home Depot sales folks over to Tesla stores to make this happen.

It certainly seems like much better use of sales resources to me. Especially while they are also in the middle of transitioning into more Solar Roof sales, which are even higher dollar than their old sales model, and you don’t reach those customers by everyone standing around a folding table in a noisy Home Depot. You sell to those people in an upscale gallery in an upscale mall like where they have Tesla stores.

G2

I really hope what you’ve said is true.

Windbourne

what else was missed is that Home Depot was making something like $7000 off each sale. Normally, it would be only 4000, but HD was gouging and the idiot brothers allowed it.
Elon did the right thing here.

Speculawyer

Yeah, It never made sense to me, trying to sell installation to DIYers. I used to see them sitting at a little card table every time I had to run to Home Depot for some electrical parts while installing my own solar PV system. Why would DIYers or small contractors sign up?

Erwin

Photovoltaic panels on your roof and batteries in your backyard are consumer electronics today. That is why Tesla is getting out of that market.

Dav8or

Are they getting out of that market? I’m not sure that they are.

Erwin

I mean almost plain, regular, mall-quality products. Tesla targets high-end markets instead. Say the Apple of the phone or the Bang & Olufsen of the audio devices.

Pushmi-Pullyu

Well, with the “Gigafactory Two” now making solar panels, they’ll get back into that market. But as Nix said, trying to sell solar panels to the contractors and do-it-yourself-ers who shop at Home Depot is a very poor fit.

For solar panel sales, it will make much more sense for Tesla Energy to aim at the commercial market. And yeah, existing Tesla stores are a much better place to sell the upscale, premium Tesla solar roof tiles. I doubt most people who own upscale houses shop at Home Depot; they hire contractors to do that for them.

David Green

The whole acquisition of Solar City seemed strange, assuming all that debt, and quarterly losses seemed like the last thing Tesla needed. at the time. This is one of the management decisions by Elon and the board that I most questioned, as there was not one metric where it looked like a good acquisition. At the same time GM bought Cruise Automation and a stake in Lyft for less money, those seemed like better investments, and now no doubt who made the better acquisitions.

Another Euro point of view

On that topic I believe that what can often be read in articles written by short sellers is not far from the truth. The purchase of solar city was done partly because a failure of that company would have been too detrimental to the success story around Elon Musk.

David Green

Agree, that is the only plausible reason not to just let Solar City vanish, Tesla could have started its own solar business from scratch and stayed away from the liabilities of Solar City.

Windbourne

SC has many POSITIVES, and few liabilities.
1) They are the largest sell of solar in America. Bar none. They accounted for about 40% of all sales.
2) the lease model was not working and they were switching to sales, but way too slowly.
3) they are now manufacturing their own line of solar panels and will have one of the high est efficiencies. So, they own the entire set-up from crystal all the way tot he roof. That means that they will get large profits per install.

Doggydogworld

“They are the largest sell of solar in America”

They were, but not any more.

“So, they own the entire set-up from crystal all the way tot he roof.”

Panasonic makes the cells and panels. Tesla makes the tiles.

David Green

Yes, and Panasonic sells better panels under their own brand then Tesla did… That is what we are putting on our new home… 100 of the HT 330, 70 facing South and 15 EA East and West, should be enough to power the entire house, and 2 EV’s, and hopefully still send some energy back to the grid.

Nix

David – Companies don’t “vanish”. Their assets, including their Intellectual Property get liquidated and sold to the highest bidder in a very long drawn out process that includes no guarantees of who ends up winning those IP rights.

Tesla wasn’t starting a generic solar business, they were specifically starting a Solar Roof business. They can’t do that while either Solar City or some other company owns that IP. The ONLY way for Tesla to start building and selling the Solar Roof product was to buy SCTY.

CCIE

Why were comments locked on the article about the accused Tesla saboteur?

We had way too many issues and people causing much concern that was taking an exorbitant amount of time to moderate. Additionally, personal attacks toward myself here and via email were becoming problematic. We had to shut it down, as we’ve had to do with some other articles as of late. The I-Pace article caused plenty of problems as well. Hopefully, people will calm down and not be abusive toward one another, and moreover, toward InsideEVs staff. We love our huge comment base and open dialogue, but if commenters are going to continue the trend, we have to take action.

CCIE

Understood. Sorry to hear people are attacking the IEVs staff. You guys do a good job, and I think it’s greatly appreciated by most of us who read here regularly.

G2

Well said.

bro1999

Wow, I knew about them personally attacking commenters like myself, but didn’t know about attacks on you guys too. Talk about 0 class.

John

Unfortunately, primarily negative/hate filled commenters like yourself change the climate from information sharing into one that’s more toward bashing. Which attracts more and more haters to the point where the hatred spew becomes the norm. Inevitably it results in folks taking it too far and attacking the moderators. You can respond with hatred, but then you’d simply prove my point. Unfortunately, the only way for someone to break out of that model is to actually start having decorum and offer well thought out input and being more appropriately selective with the attacks/cricitsms.

Just one man’s opinion. And have an awesome weekend bro1999. Thanks for being a member of the EV fraternity.

David Green

I like deep discussion, even spirited deep discussion, but there is no place for the personal attacks, and insults. For some reason on these message boards people have gotten away with too much for too long, and it has become normal for them to be mean to each other, but at the end of the day, I hope we are all promoting EV adoption and sustainability in some way shape or form. I am getting ready to build a new house, and was digging test pits yesterday, when neighbors came over and were asking, so I got the chance to talk about ground sourced heat pumps, solar and EV’s. Turns out the closest neighbor has a Tesla S, and solar, so it was a pretty cool conversation.

Cool story. We know up front that if we publish an article about an EV that is good in our opinion, but not a Tesla, the comments will get fiery fast. We also know that if we publish any news about Tesla that may expose what the media is calling a negative, the comments and emails will blow up. On the same note, when we praise Tesla and share the good news, there is another group of people that will do everything they can to drive it down. However, if we are going to remain one of few sites that publishes positive and negative news about all EV automakers, we can’t simply avoid the news that’s out there. It’s a slippery slope. Hopefully, our readership and commenters put EV adoption above all else. While frank and heated discussions and debates can be a good thing, attacks are not. This is even more true when it begins to take our attention away from sharing the news, and instead, redirected to handling attacking emails and comments toward the site and its employees.

David Green

Thats really sad. many owners love their Tesla’s, but not everyone loves them. What I find, is the most aggressive Tesla defenders are not the owners, or even shareholders, they are are the dreamers, that wish they had a Tesla, or shares.

Magnus H

90% of comments is about the other commenters, if they are trolls, fanboys, shorters of fudsters.

Remove all comments that mentions another, specific commenter.

Best laid plans for sure, but if I did that I would have to stop writing. I try to knock out a bunch of them. But there are 1000s, and many are like that. It would be really funny to moderate the words trolls, fanboys, shorters of fudsters and see how many comments the system deletes. We aren’t about stopping the community from talking or debating, and we honestly don’t have the time or resources to carry out hardcore moderation. We just wish and hope that people would make an attempt to play on the same team to a certain degree. It’s not going to go away, and to expect that would be unfair. But, on certain days and certain posts, it just gets to be too much to handle. Once they start emailing me all day long, it’s out of hand.

Dav8or

Ooo!! We can email you??!! I had no idea. Oh man, fire up the keyboard… j/k 😉

Haha

Pushmi-Pullyu

But I am a Tesla fanboy! 🙂 And proud of it, too.

That’s different. Haha

Windbourne

Continue to publish BOTH sides. You are journalists, not marketers or politicians.
And many of us DO enjoy your stories, even the ones that we do not like the subject.

Of course! That’s what we do. Thanks.

bro1999

Question was asked, and I answered it (and confirmed by Steve’s comment above). Next!

David Green

Bro, I think calling them Tesla fanboys is borderline insulting… should cool it a bit , and try to have a place that is fun to chat and discuss rather then a battleground.

John

I keep trying to tell him/her that, but it doesn’t seem to have any effect.

Pushmi-Pullyu

I guess I’m an outlier, then, because I am proud to be a Tesla fan, and don’t at all mind being called a “fanboy”.

Do you know that the term “Christian” (literally meaning “little Christ”) was originally a derisive term? But followers of Christ adopted the term for their own. Take possession of a label someone else puts on you, and you remove any power it has over you.

Nix

Tesla’s transition to Solar Roofs is a re-alignment of the solar business plan with Tesla’s very successful “secret” EV business plan.

Tesla is rebooting solar at the TOP of the solar industry, the same as the Model S started at the top of the luxury car market. The goal is to make a product that is simply better in every way than the current top end roofing materials on top end houses. And they already have a wait list, so spending money on sales people at this point is counter-productive.

Tesla will sell to fewer people, but at a higher margin, with a superior premium product. Then they will drive down the Solar Roof into less expensive markets the same way they are putting out the Model 3 which is less expensive than the Model S. This is how Tesla’s solar division will succeed in the middle of a market consolidation in the solar industry where the total number of solar panel makers is expected to shrink as the market matures (Consolidation is a very standard thing to happen in every maturing industry).

Vexar

In line with this, I think the margins on residential solar installation are tough because of labor management, and it is easier to book deals for new construction of neighborhoods than it is to deal with so many consumers. Although I expect Tesla will continue to do grid-stabilizing projects and large installations, it makes sense to do residential roof+solar primarily.
Also, they have added a Tesla Energy sales rep. at my nearest Service Center, so I expect they are consolidating the responsibility to cover Powerwall, Powerpack and Solar Roof products. Consolidating platform, shifting regional division, and expecting more of your existing sales staff is expected in sales. Let’s not forget that the sales reps hit Tesla with the $1M settlement this month, so in response, they are likely saying “OK, we’ll pay you more, but you’re doing more, and there are fewer of you.”
This is a subtle and positive bit of news.

Spider-Dan

While that seems like a reasonable strategy, the question then becomes why Tesla bought SolarCity in the first place. If Tesla isn’t using SCTY tech, isn’t using their door-to-door sales model, and isn’t using their sales infrastructure… what did Tesla gain from buying SCTY in the first place? Tesla could have just entered the solar market by selling their high-end roof from existing Tesla stores.

Nix

Solar Roof was SCTY tech. It is the cornerstone of Tesla’s solar move. No SCTY, no Tesla Solar Roof. SCTY also came with a very large, very inexpensive factory (Gigafactory 2).

It also threw open the door for Tesla to have their own solar factory to build out traditional solar to use to cover their factories and chargers with solar panels. Which they are very much doing now that they own SCTY

Doggydogworld

Solar roof was invented after the SCTY deal was announced to help generate excitement and win approval for the deal. It was not SCTY technology.

Nix

It was ANNOUNCED after the deal but it was Solar City IP

Doggydogworld

The entire effort was started a few weeks before the announcement. The houses on Wisteria Lane has mock ups, not real tiles.

Nix

LOL!!! Funny joke there. Clearly you don’t understand how IP works and the time frames involved.

Doggydogworld

Nix, Why do you talk smack when you’ve done no research?

SCTY’s Zep subsidiary had an inexpensive metal solar roof concept. Musk said it was too ugly so they scrambled and brought 3M in to develop a completely different quartz tile/micro louver concept.

I exaggerated when I said a few weeks. The solar tile was conceived two months before the launch event.

https://www.fastcompany.com/40422084/inside-steel-pulse-the-mysterious-project-that-became-elon-musks-solar-roof

Nix

All you have done is prove that the IP for the solar roof dates back to “late 2015”, long before any merger. And that Elon’s involvement in the entire process until 11/21/16 was as Chairman of Solar City and Elon’s work product was property of SCTY.

Absolutely everything done on the solar roof (whether in steel or glass format) from late 2015 until 11/21/16 is ENTIRELY the intellectual property of Solar City. If Tesla had not bought Solar City, Elon could not have used any of that IP to create a Tesla solar roof.

A SCTY liquidation would have tied all solar roof IP up in liquidation proceedings until the highest bidders finalized the IP purchase out of bankruptcy. GF2 would have been lost, and Tesla would have 100% been precluded from using any of that IP. That IP, including everything Elon worked on would go the the highest bidder, and would still be tied up in the courts today.

Nix

I see the core of your problem now. You somehow believe that Solar City’s intellectual property rights somehow stopped when Tesla stated their INTENT to purchase SCTY.

That is false.

Solar City’s IP includes absolutely everything done all the way up until the sale was finalized Nov 21st of 2016. Including everything Musk worked on with any other company as part of development. He can’t simply take work he did wearing his SCTY Chairman hat, and put it into production under Tesla. That would be an IP violation.

If that sale had not completed at the end of 2016, ALL of the solar roof IP would likely STILL be tied up in a stagnant SCTY company that would lack the funding to bring it to market.

doggydogworld
1. No “solar roof IP” from before August 2016 survived. Musk scrapped SCTY’s original IP, calling it “sh*t”. 2. Musk then directed engineers to create completely new IP. The quartz tiles have NOTHING in common with the metal roof. Different materials, different form factor, different connectors. Every single thing is different. 3. Engineers quickly worked with 3M to create mock-ups of what quartz tile products might one day look like. 4. Musk revealed these mock-ups in a high profile event to help win TSLA voter approval for the bailout. There was still no IP (besides 3M’s) since the mock-ups didn’t work. Who worked with 3M to create the completely new quartz tile mock-ups, TSLA or SCTY? It’s not clear. Nor does it matter. Musk tasked engineers to do it. Musk approved the budget. Had he decided against buying SCTY he would have simply tasked TSLA engineers to do it. There was zero need to buy SCTY for their “solar roof IP”. If not for Musk having his own money in SCTY, his cousins running it and his reputation attached to it, he’d have thrown them out on their ear the minute he saw that ugly metal roof. He’d have said… Read more »
Spider-Dan

Tesla could have bought plenty of solar panels for all of their factories and chargers for significantly less than they paid for SCTY.

Nix

It is the difference between buying a cow and getting the milk at cost forever, and buying a few gallons of milk at retail. The few gallons of milk are cheaper in the short term, but in the long term owning the cow and drinking as much as you want and selling the rest to cover your costs of making the milk is way cheaper in the end.

You are short term thinking. Tesla thinks long term.

Spider-Dan

Milk is a consumable; solar panels are durable goods. The better analogy would be “buying steel and building a factory” vs. “buying an iron mine so you can build unlimited factories at cost”… you just don’t need that many factories. Solar panels last for decades, and $2.6B buys A LOT of solar panels… especially when Tesla still has to build them at cost after buying SCTY.

drpawansharma

It is the lull before the storm, Tesla solar roof tiles cometh….

bro1999

I saw an empty display area between one of the aisles at Home Depot last time I was there a couple of days ago that had random pamphlets on the floor. Must have been one of the abandoned Solar City displays.

Perhaps I need to shut this comment thread down as well? Already …

Bill Howland

Yeah when I checked into this a few years ago, ( Got my house system working exactly 4 years ago yesterday), Tesla said they are not operating in the Buffalo, NY area (even though the plant is here), seeing as the going rate for solar installations in my area is WAY TOO LOW, hehe. By doing much of my own work with an agreement with the Contractor, I got an even better deal.

I agree with the comment that finally, Tesla has priced themselves out of the market for plain old solar panels. If they could get these fancy roofs working without too much additional effort, then they might have a great product for sale. But I think it is totally dependent on that fact.

Windbourne

those fancy roofs will go in nicely into California as well as places like Colorado. Why Colorado? Because we get TONS of Hail each year. Literally, tons.
BUT, where this will go in nicely is look for roof tops that are NOT regular shingles, or wood shakes, or flat tar roofs. If they are concrete tiles, or metal, or slate or …., those are IDEAL since they costs similar if not even more than tesla.

And Tesla guarantee to infinity makes it pretty good.

Nix

Yes, the solar roof is certified best in all the natural disasters a roof might face in Colorado. From hail, to fire, to tornados (wind). Some home insurance companies will give you a home insurance discount for highly rated roof materials against these hazards, and the solar roof gets top ratings on each.

Hail rating
Class 4 ANSI FM 4473 (best hail rating)
Wind rating
Class F ASTM D3161 (best wind rating)
Fire rating
Class A UL 790 (best fire rating)

Clarity

I put a down payment on the website, emailed tried to get in contact with anyone at to get solar installed. I need a new roof on my house anyway and never got one call or email. Requested my money back and it was returned fairly promptly. I am sure there are more people like me. I just don’t understand why there cannot help customers with money in hand.

Nix

What state are you in? They are rolling out sales state-by-state. You may be geographically disadvantaged.

Speculawyer

Buying Solar City really was just a buy-out of his relative’s stock. It wasn’t a great move…at least for that high price. The solar installation biz is pretty cut-throat & low margin. The new slate stuff may redeem the buy-out but maybe not.

Pushmi-Pullyu

Was the Tesla buyout of Solar City worth the price? Well, the jury is still out on that.

As Nix quite appropriately noted, Tesla did get a brand-new solar panel factory, now dubbed “Gigafactory Two”, on the cheap. So altho Tesla did acquire a lot of debt with the buyout, it did get some assets too.

Selling solar power installations does fit the holistic approach that Tesla advocates for clean power and non-polluting transportation. Whether or not Tesla can make a profit at that, I don’t think anyone can yet say. But certainly Tesla is going to take advantage of getting solar panels at cost from Gigafactory Two, to put them on the roof of its current and future Gigafactories, if nothing else!