SolarCity will soon have fewer employees to carry out chairman Elon Musk’s clean-energy dreams for the California solar installer.
The Rive brothers, who are also Musk’s cousins, agreed to whittle their annual salaries down from $275,000 each to $1 per year, the legal minimum salary. The company told investors it expected to take charges of $3 million to $5 million for severance costs related to the layoffs.
SolarCity, the biggest U.S. solar installer, is facing slowing demand for its rooftop solar installations.
The company last week another unprofitable quarter and said its debt had increased to $3.35 billion. Solar installations may drop over 15 percent in the next quarter to 170 megawatts of panels, down from 201 megawatts in the second quarter.
Image: The Washington Post/Getty Images
News of the layoffs comes after Musk, SolarCity’s top shareholder, to make “solar roof” modules that serve as roof shingles, instead of separate panels affixed to the roof. The company will also develop a storage system that could help the main electric grid to run more smoothly and reliably.
SolarCity’s realignment also arrives as the company prepares to be sold to Tesla Motors, Musk’s electric car company, for $2.6 billion. Musk proposed the deal earlier this summer, explaining it was part of his broader vision to build a — one that allows customers to produce solar energy on their rooftops, charge batteries in their garage and drive electric vehicles powered only by the sun.
Some analysts, however, have been of Musk’s rationale and questioned whether the move isn’t just an attempt to bolster Musk’s business empire. The billionaire entrepreneur holds a 21.3 percent stake in Tesla and a 22.2 percent stake in SolarCity.
Image: Getty Images
Other experts have previously observed that the timing of the Tesla-SolarCity deal couldn’t be worse, given that both companies are years away from profitability and both are quickly burning through cash.
He said the Rives' $1-a-year salaries were “a symbolic move, an appropriate one in my view, but still mostly symbolism,” Bloomberg reported.