Exclusive: Tesla will close a dozen solar installations in nine states – documents



LOS ANGELES / SAN FRANCISCO (Reuters) – Tesla Inc's decision to cut 9 percent of its workforce last week will drastically reduce the residential solar business it bought two years ago in a controversial $ agreement. 2.6 billion, according to three internal agreements documents of the company and seven current and former Tesla solar employees.

FILE PHOTO: Elon Musk, President of SolarCity and CEO of Tesla Motors, participates in the SolarCity Energy Summit in Manhattan, New York, on October 2, 2015. REUTERS / Rashid Umar Abbasi / Photo File [19659003] The last cuts in the division that was once SolarCity, a sales and installation company founded by two cousins ​​of Tesla CEO Elon Musk, includes the closure of a dozen installation facilities, according to internal documents of the company, and ends a retail partnership with Home Depot Inc that current and former employees said generated approximately half of their sales.

Some 60 installation facilities remain open, according to an internal list of companies reviewed by Reuters. An internal email from the company mentioned 14 installations scheduled for closure, but the other list included only 13 of those locations.

Tesla declined to comment on what sites he planned to close, how many employees would lose their jobs or what percentage of the solar workforce they represent.

The company said that cuts to its power equipment in general, including batteries to store energy, were in line with the overall cut of 9 percent of personnel.

"We continue to expect Tesla's solar and battery business to be the same size as the automotive in the long term," the company said in a statement to Reuters.

The operational closings, which have not been previously reported, raise new questions about the viability of Tesla's solar business and Musk's fundamentals for a merger that it once called "a piece of cake", but some investors have considered it a rescue. of an affiliated company at the expense of the shareholders of Tesla. Prior to the merger, Musk had served as chairman of the board of directors of SolarCity.

The installation offices that, according to the internal email, were intended to be closed, were located in California, Maryland, New Jersey, Texas, New York, New Hampshire, Connecticut, Arizona and Delaware.

The company also fired dozens of solar customer service employees in call centers in Nevada and Utah, according to former Tesla employees, some of whom were fired in the cuts last week. Those employees spoke on condition of anonymity because making public comments could violate the terms of their compensation packages.

"It's been a tough day, 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.

Tesla has been consuming cash while trying to achieve the goal of producing 5,000 Model 3 electric sedans per week after production delays. The company faces pressure from investors to make a profit without having to resort to Wall Street to obtain additional capital.

FILE PHOTO: A SolarCity vehicle is seen on the road in San Diego, California, USA. UU June 22, 2016. REUTERS / Mike Blake / File photo

The total number of cuts in the solar workforce remained unclear. Some of the personnel from the closed facilities were transferred to other sites, current and former employees said. SolarCity employed about 15,000 people by the end of 2015, but has since reduced thousands of workers.

Ending the Home Depot partnership, which allowed solar sales in approximately 800 stores, is part of Tesla's biggest effort to absorb SolarCity into its high-end brand and sell through 90 of its 109 US retail stores. UU And your website, the company said.

"Tesla stores have the highest pedestrian traffic of any commercial space in the country," said Tesla.

Analysts questioned Tesla's plans for the solar business in light of the latest cuts to staff and retail operations.

"In effect, they seem to be saying: 'We have no strategy to sell solar power,'" said Frank Gillett, an badyst at Forrester Research, adding that the purchase of SolarCity "looks pretty awful in this moment".

FALL SALES

In the first quarter of this year, Tesla installed 76 megawatts of solar systems, down from SolarCity's more than 200 MW per quarter in early 2016, when it was the industry's leading player. Announcing quarterly results in February, Tesla said growth in solar deployments would resume later this year.

Tesla's declining solar sales could also jeopardize the future of a joint venture with Panasonic, announced when Tesla decided to buy SolarCity in 2016, to produce solar modules in a new factory in Buffalo, New York.

Tesla has an agreement with the state of New York that requires the company to spend $ 5 billion within 10 years. If Tesla does not comply with that obligation and others, the company may be forced to pay tens of millions of dollars in fines at several milestones, could lose its lease or be forced to write off the badets, the company told investors in a May report. .

PHOTO OF ARCHIVE: The men gesticulate next to the solar panels installed by Tesla, in the Children's Hospital of San Juan, after the island was hit by Hurricane Maria in September, in San Juan, Puerto Rico on May 26. October 2017. REUTERS / Alvin Baez / File Photo

In response to questions from Reuters, Tesla said he is complying with his contracting and spending commitments for the factory.

In March, a Delaware judge ruled against a motion by Tesla to dismiss a lawsuit filed by the company's shareholders for the deal with SolarCity. The lawsuit alleged that the Tesla board of directors failed to comply with its duties with the shareholders when approving the merger.

SolarCity founder Lyndon Rive, who is Musk's first cousin and left Tesla last year, did not respond to a request for comment.

HIGH COMMERCIALIZATION COSTS

The move to end Home Depot's long-standing partnership surprised many staff members because Tesla had announced an expansion of the agreement as recently as in February.

GTM Research badyst Austin Perea estimated that the badociation has recently accounted for about half of sales, in part due to previous moves by Tesla to cut other sales and marketing costs.

These third-party retail badociations are among the most expensive means to generate solar sales, according to the clean energy research firm, in part because retailers take a cut from each sale.

According to GTM Research, the cost of winning a customer at a store like Home Depot can be up to $ 7,000 per system, compared to a national average of $ 4,000 per installation.

Home Depot spokesman Stephen Holmes said the retailer's relationship with Tesla would last until the end of the year, adding that Home Depot would continue a partnership with Tesla Sunrun's competitor in an undisclosed number of stores.

Over the past year, Tesla has stepped up its efforts to sell solar power and batteries for energy storage in its retail stores, something that Musk said last year was "a much more efficient channel for generating demand".

At the same time, Tesla stopped door-to-door sales, once among SolarCity's most successful means of reaching new customers, and vendors could no longer hold local events or buy potential customers online, former employees said. .

Such tactics are standard practices in the majority of the competitive residential solar industry.

The Home Depot partnership was expensive, but also integral to Tesla's solar panel sales, a former employee told Reuters.

"It's a costly account," the former employee said, "but it generates all the revenues."

Reports by Nichola Groom in Los Angeles and Salvador Rodriquez and Kristina Cooke in San Francisco; Edition of Richard Valdmanis and Brian Thevenot

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