[font face=Serif][font size=5]With SolarCity Cuts, Elon Musks Magic May Be Wearing Thin[/font]
[font size=4]As demand for its rooftop solar panels slows, SolarCity cuts costs and seeks a fundamentally new strategy.[/font]
by Richard Martin | August 18, 2016
[font size=3]Residential solar provider SolarCity has announced layoffs and cost-cutting measures, only a few weeks after Tesla Motors
announced plans to acquire it. The move is one of several good reasons to be skeptical about whether Elon Musks master plan to unite the two money-losing companies is, in fact, good business.
In a statement Wednesday, the company said, We fully expect to grow again in 2017, but we must reduce costs in the short term to be in position to do so. Combined with Musks comments on the
companys discouraging earnings call earlier this month and recent developments in the residential solar market, the moves seem like not just a temporary cost-cutting measure but a worrying sign of deeper trouble.
SolarCity is struggling to find a business model to replace the 20-year leases that fueled the companys growth but have become
increasingly unpopular with both banks and customers. Less than three months ago, it introduced a loan program designed to attract customers who prefer to purchase rather than lease their panels, but that offering has failed to shore up flagging demand for SolarCitys product.
[font size=1]Elon Musk[/font]
Musks grand vision for an integrated solar-plus-electric-vehicle behemoth, meanwhile, looks increasingly like a
reality distortion field. The opening of the massive solar-panel factory the company is building in Buffalo, New York, has already been pushed back to mid-2017. Some analysts have estimated that the factory is likely to
lose as much as $150 million a year once it reaches full production.
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