Tesla finally confirmed that the company’s “Solar” division will end a partnership with Home Depot and close about 20 percent of its installation centers.
Tesla’s (OTC:TSLA) stock price fell by 4 percent on Friday and has fallen almost 11 percent since Monday, as the company has been hit with a week of negative news stories.
The tough week was capped by what Reuters called an “exclusive” employee leak late Thursday evening, claiming that Tesla’s Solar division had targeted closing 13 to 14 installation locations in California, Maryland, New Jersey, Texas, New York, New Hampshire, Connecticut, Arizona and Delaware.
After the close of Wall Street trading on Friday, Tesla confirmed to the ARS Technica website that the Tesla Solar layoffs are part of a 9 percent staff reduction, or about 3,300 workers, and that the company is terminating its “Solar Renewable Energy System” partnership with Home Depot by year’s end.
ARS Technica reported that the Home Depot partnership had allowed Tesla Solar to access a big potential audience. But the customer acquisition cost for Home Depot was about $3,000 more than if Tesla generated a customer with its own sales force.
Tesla Solar is the successor to SolarCity, which Tesla acquired for $2.6 billion in 2016, despite SolarCity’s cash outflow rising from $790 million in 2015 to $867 million in the first half of 2016 alone.
Problematic acquisition also obligated Tesla to a joint venture manufacturing deal with Panasonic called the “Gigafactory 2.” The 1.2 million square-foot facility on 88 acres in Buffalo, New York, required Panasonic to cover $260 million of factory capital costs and Tesla to purchase all of Panasonic’s production of solar panels and solar glass tile roofs.
Tesla also signed an agreement with the New York State to spend $5 billion at the Buffalo plant over the first ten years of operation. Failing to meet the spending milestones could result in millions of dollars in penalties, loss of the facility’s lease, and a charge off of its investment, according to Reuters.
Panasonic and Tesla told Electrec in April that the “Gigafactory 2” partnership had about 500 employees and was hiring in an effort to scale production “to reach a capacity of 1 to 2 gigawatts of solar products.”
A Delaware Chancery Court on March 28 denied a motion by Tesla to strike a shareholders’ securities fraud lawsuit claiming CEO Elon Musk and other members of Tesla’s board of directors took unfair advantage of shareholders to complete the SolarCity buy-out.
The judge’s ruling states that the plaintiffs had presented “sufficient facts to support a reasonable inference that Musk exercised his influence as a controlling stockholder with respect to the Acquisition.”
Joel B. Pollak is Senior Editor-at-Large at Breitbart News. He was named to Forward’s 50 “most influential” Jews in 2017. He is the co-author of How Trump Won: The Inside Story of a Revolution, which is available from Regnery. Follow him on Twitter at @joelpollak.