Tesla To Close a Dozen Solar Facilities In 9 States (cnbc.com)

An anonymous reader quotes a report from CNBC: Electric car maker Tesla'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 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.

Comments

My perspective as a stock holder.

[EnsilZah]

I've seen short sellers jumping on this, claiming Tesla's energy division is failing, claiming that this is confirmation that the Solar City buyout was a bailout for Elon's cousins.

What I see here is Tesla restructuring to be more efficient and consistent.
Tesla is a company that grew very quickly and incorporated into itself a few smaller companies, the largest of which is Solar City.
As a result of that past there are a lot of roles that grew out of a structure that fit a much smaller company that don't make sense now, roles that are redundant between Tesla and SC, etc.

As far as I understand, SC was more of a distributed solar power company that dealt with all aspects of installation, maintenance, financing, etc.
Tesla's residential energy division is transitioning more towards having solar and battery products being something the consumer or the house builder buys directly as product.
So they sold off the maintenance/upkeep contracts to other solar companies and they're bringing all their sales people inhouse, into the same stores they display and sell their cars in.

Tesla's battery storage division is growing significantly.
And sure, like the with the Model 3 production, their new solar tile/panel factory might be taking longer than expected to ramp up, but I wouldn't take that as failure by any stretch, I often see analysts looking at last year's number, comparing it to this year's number and deciding that because it's lower or higher it is worse, without even considering it in the actual context of how the company is run.

Re:My perspective as a stock holder.

[beelsebob]

It's not just restructuring to be more efficient, it's simple - Trump put a huge tariff on Solar Panel imports. That means it's much harder to make a profit being an installer now.

This is quite literally Trump's trade war in action.

Re:My perspective as a stock holder.

[aaarrrgggh]

50% of revenue with very low profit isn’t something to cry over.

The problem is essentially that SolarCity had a very high customer acquisition cost by using Home Depot ($7,500 from reports, as opposed to an average $4,000). That cost, even at the lower end, is simply too high unless the customer is spending $40k+.

By doing more to vertically integrate and leverage the high traffic Tesla stores, they do more to improve their brand. They can also switch more to a wholesale model where the battery division really shines.

As an investor, my only concern with this is making sure they can maintain access to the “Home Depot crowd” without a presence there.

Re:FAKE NEWS

[Rei]

Which isn't remotely what happened here. A dozen solar install locations are not "20% of their business operations".

Tesla's solar division (formerly SolarCity) is transitioning from being a (low margin) installer of other people's solar panels into a solar roofing product manufacturer.