The San Mateo, Calif., company is the largest residential solar installer in the United States.
(TNS) — Facing mounting losses, SolarCity on Wednesday announced a corporate restructuring, including layoffs and slashed executive pay.
The San Mateo solar panel installer is setting aside $3 million to $5 million for restructuring, primarily to pay for severance payments, the company told regulators. Most of the buyout packages will be paid this year. The company also cut the salaries of co-founders Lyndon and Peter Rive from $275,000 to $1.
SolarCity, the largest residential solar installer in the United States, employs about 13,000 workers. It serves 285,000 customers in about 20 states and the District of Columbia.
SolarCity spokeswoman Kady Cooper said the company would not release details about the cuts. While sales have improved, she said, the company still fell short of expectations for the first half of the year. SolarCity revenues grew 80 percent during the most recent quarter, but it still had net losses of $55 million in the second quarter. The company has yet to turn a profit.
"We've been adjusting our costs to align with the amount of solar we expect to install in the second half of the year, and unfortunately that also includes head count reductions," Cooper said.
SolarCity also expects to release new battery storage and solar roofing products this year, she said.
The Silicon Valley firm is backed by Chairman Elon Musk the CEO of Tesla, and led by his cousin, CEO Lyndon Rive. Tesla agreed to buy SolarCity for $2.6 billion in stock this month, a move that Musk says will make the solar company more efficient and seamlessly blend renewable energy and electric vehicles. Musk said the acquisition would also make it easier for SolarCity to reach Tesla customers through the electric vehicle maker's network of retail stores. The deal requires approval from federal regulators and shareholders.
Edwin Mok, senior analyst for Needham & Company, said the move was not surprising in light of the recent quarterly report. The company needs to restructure and become cash-flow positive, he said. The market for residential and commercial solar is growing, but several solar companies are struggling to become profitable.
"Right now, it's a tough space," Mok said. SolarCity stock was down about 1 percent Wednesday.
©2016 the Contra Costa Times (Walnut Creek, Calif.), Distributed by Tribune Content Agency, LLC.