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Tesla is planning to close 13 or 14 solar installation locations that were set up by SolarCity before Tesla purchased the company in 2016. Tesla will also end its partnership with Home Depot at the end of the year.
The new information was first reported by Reuters, which obtained internal emails and documents detailing the closures. A Tesla spokesperson told Ars that the closures are part of the layoffs it announced in early June.
An official statement from the company contended that Tesla’s solar business is better served in its existing Tesla stores. “Tesla stores have some of the highest foot traffic of any retail space in the country, so this presents a unique benefit that is demonstrated by the growing number of Tesla vehicle customers who are also purchasing energy products through our stores,” the statement said.
The dozen-or-so installation centers that will be closed are located in California, Maryland, New Jersey, Texas, New York, New Hampshire, Connecticut, Arizona, and Delaware, Reuters noted. About 60 installation centers will remain open. Staffers at solar customer service call centers in Nevada and Utah were also laid off recently. Some staffers at the installation centers that will close will be reassigned to other centers, so it’s unclear how many solar employees have been cut.
Soon after Tesla purchased SolarCity in late 2016, Tesla ended the company’s practice of making door-to-door sales.
Tesla is facing pressure from investors to turn a profit amid a turbulent and scandal-ridden Model 3 production ramp-up. Its decision to end its partnership with Home Depot is likely the result of that pressure as well. According to sources speaking to Reuters, the partnership with the big box retailer was responsible for half of the solar department’s sales last year.
Although its partnership with Home Depot allows Tesla’s solar division to reach a large audience, customer acquisition can cost almost $3,000 more per customer than if Tesla independently acquired that customer, because the company has to share some of its revenue with Home Depot.
But the contraction of solar sales under Tesla has been significant. In the first quarter of 2016, just before its sale to Tesla, SolarCity installed 200 megawatts of solar panels. In the first quarter of 2018, Tesla sold only 76MW of solar capacity.
A Tesla spokesperson pointed to the guidance Tesla gave in its Q1 2018 financial report to justify its solar contraction. In addition to rerouting traffic through Tesla stores, the company claims that “a significant part of our customer base is waiting for a Powerwall before getting their solar panels installed. We continue to prioritize Powerwall deliveries when they are sold together with our retrofit solar panels, and this should have a positive impact on our solar deployments in upcoming quarters.”
The company is also working on rolling out a new product: solar tiles for Tesla’s solar roof. “Production of Solar Roofs should accelerate significantly in the second half of this year,” the Q1 2018 statement said. Earlier this year, Tesla began producing the tiles at its Buffalo factory, though customer installations have been slow. The company made a deal with the state of New York to hire a certain number of people and spend a certain amount within the state in exchange for benefits and tax breaks. A Tesla spokesperson said the company is ahead of its hiring and spending commitments on the Buffalo project.
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