Tesla’s latest regulatory filing reveals SolarCity staff reduction and cost-cutting measures
Tesla’s acquisition of SolarCity has always been fraught with controversy. Would Tesla’s share price tumble when burdened with the SolarCity debt? Could SolarCity maintain industry prominence as tax incentives for solar installations were slashed by state and federal governments? What changes would Tesla need to implement within the SolarCity business model in order to maintain cash reserves? Some of those questions were answered Wednesday through Tesla’s regulatory filing.
The filing revealed that SolarCity had 12,243 employees at the end of 2016, down 19.8% from the 15,273 it reported a year earlier. Yesterday’s filing is part of a larger picture in which clear, consistent, and transparent messaging signaled to investors that keeping SolarCity’s business expenses down is important to Tesla. Also in the annual filing, SolarCity said sales and marketing expenses fell 3 percent in 2016, in part due to staff cuts and efforts to boost sales efficiency.
The move is seen as a mechanism to preserve cash during a period of slowed growth in the rooftop solar industry. The filing indicated that many areas of operations were affected by the job cuts, including operations, installations, manufacturing, sales, and marketing departments.
SolarCity’s reduction in force signals a reversal of its previous patterns of employee expansion. For example, in 2015, the number of SolarCity employees swelled by 68.7 percent. Like many other solar companies, SolarCity reacted to forces that required it to reestablish the company on stable financial footing that differs from its original approach of offering no-money-down financing, along with a vast sales operation.
In contrast, SolarCity’s general and administrative jobs saw percentage reductions starting in mid-2016. Economic conditions often force many companies to significantly reduce workforce operating costs as restructuring strategies to drive revenue and stabilize operations. Productive workforces prioritize jobs, departments, and operating units based on their impact on company revenue. Just last month during a Q&A session following 2016 annual financial overview reports, Tesla outlined how it intended to lessen SolarCity advertising expenditures through exposure to the public of its rooftop systems in Tesla’s network of retail stores. The company is also realigning focus to cash sales of systems instead of lease programs as a means to generate cash.
Tesla (NASDAQ: TSLA) acquired SolarCity in November, 2016. According to a report by Reuters , some of the job cuts cited had taken place prior to the Tesla/ SolarCity consolidation, with 550 job loss attributed to a Nevada cancellation of a key solar incentive.
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