SolarEdge to cut 16% of its global workforce amid plunging demand for solar inverters

SolarEdge Technologies, Inc., a leading provider of smart energy solutions for solar power systems, has revealed that it will slash 16% of its global workforce, or 900 employees, as part of a restructuring plan. The company said that the layoffs will affect about 500 workers from its various manufacturing sites, mainly in Israel.

The decision comes as SolarEdge faces a sharp decline in demand for its solar inverters, which are devices that convert direct current (DC) from solar panels into alternating current (AC) that can be used by homes and businesses. The company’s shares have fallen by almost 80% in the past year, as it warned in October about “substantial unexpected cancellations” from European distributors.

SolarEdge to cut 16% of its global workforce amid plunging demand for solar inverters
SolarEdge to cut 16% of its global workforce amid plunging demand for solar inverters

Why is SolarEdge struggling?

SolarEdge was founded in 2006 with the vision of making solar energy more affordable and widespread. It developed an innovative inverter solution that can harvest and manage power in solar photovoltaic (PV) systems more efficiently and reliably than conventional inverters. The company claims that its products can increase the performance and lifespan of solar panels by up to 40%.

However, SolarEdge has faced increasing competition from other players in the smart energy market, such as Enphase Energy, Huawei, and Tesla. These rivals have also launched their own versions of inverters that can integrate with other components of a solar system, such as batteries, microgrids, and electric vehicles.

Moreover, SolarEdge has been affected by several external factors that have reduced the demand for its products. These include:

  • The slowdown of residential solar adoption due to higher mortgage rates and lower tax credits.
  • The reduction of manufacturing capacity in Mexico and China due to trade tensions and environmental regulations.
  • The termination of its light commercial vehicle e-mobility operations due to low profitability and high costs.

What are the implications for SolarEdge?

SolarEdge said that it remains confident in the long-term growth of the solar energy market, despite the current challenges. It said that it will continue to invest in research and development, innovation, and customer service.

The company also said that it will focus on its core markets of North America and Europe, where it has a strong presence and reputation. It said that it will exit or reduce its operations in other regions where it faces low margins or high risks.

SolarEdge’s CEO Zvi Lando said: “We have made a very difficult but necessary decision to implement a workforce reduction and other cost-cutting measures in order to align our cost structure with the rapidly changing market dynamics. We remain committed to continue to drive the renewable energy transformation.”

The company expects to incur an operating loss of $150 million for fiscal year 2023, which ended on December 31. It also expects to generate positive cash flow from operations by fiscal year 2025.

How did other companies react?

SolarEdge’s announcement came as a surprise to many analysts and investors who had expected the company to perform better amid rising demand for clean energy solutions. Some analysts had raised their price targets on SolarEdge’s stock before the news broke out.

However, some analysts also expressed concerns about SolarEdge’s ability to survive and thrive in a competitive market. They questioned whether SolarEdge could maintain its technological edge over its rivals or whether it would lose customers’ trust due to quality issues or delays.

One analyst wrote: “SolarEdge is facing a tough environment where competitors are catching up fast with their own products. The company needs to show more differentiation or innovation if it wants to stay ahead.”

Another analyst wrote: “SolarEdge is cutting jobs at a time when many customers are looking for more reliable and efficient solutions for their solar systems. The company needs to address these concerns or risk losing market share.”

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