Electric car maker Tesla Inc’s move to cut 9 percent of its job will downsize the residential solar business it bought two years ago in a $2.6 billion deal, Reuters reported.
SolarCity – a sales and installation company founded by two cousins of Tesla CEO Elon Musk – will be closing about a dozen installation facilities.
About 60 installation facilities remain open. 14 facilities are slated for closure.
Tesla said that cuts to its overall energy team – including batteries to store power – were in line with the broader 9 percent staff cut.
The operational closures raise new questions about the viability of cash-strapped Tesla’s solar business and Musk’s rationale for a merger.
The installation offices that the internal email said were targeted for closure were located in California, Maryland, New Jersey, Texas, New York, New Hampshire, Connecticut, Arizona and Delaware.
The company fired dozens of solar customer service staffers at call centers in Nevada and Utah.
SolarCity employed about 15,000 people at the end of 2015 but has since cut thousands of workers.
In the first quarter of this year, Tesla installed 76 megawatts of solar systems – down from SolarCity’s more than 200 MW a quarter in early 2016, when it was the leading player in the industry. In announcing quarterly results in February, Tesla said growth in solar deployments would resume later this year.
Tesla’s falling solar sales also could jeopardize the future of a joint venture with Panasonic, announced as Tesla moved to acquire SolarCity in 2016, to produce solar modules at a new factory in Buffalo, New York.
Tesla has an agreement with New York state requiring the company to spend $5 billion within 10 years. If Tesla fails to meet that obligation, the company may be required to pay tens of millions of dollars in penalties at various milestones, could lose its lease, or be forced to write down the assets, the company told investors in a May filing.