SolarEdge to shut down energy storage division, lays off 500 workers in South Korea
SolarEdge to shut down energy storage division, lays off 500 workers in South Korea
Amid declining revenues and leadership changes, SolarEdge restructures to concentrate on solar operations.
SolarEdge is undergoing a challenging restructuring as it shifts focus to its core solar business and shuts down its energy storage division. This move entails laying off 500 employees in South Korea and selling the Sela 2 manufacturing plant. The closure, spearheaded by interim CEO Ronen Faier, is expected to save $7.5 million per quarter starting mid-2025.
The energy storage division, built around the 2018 acquisition of South Korean company Kokam for $110 million, primarily focused on large-scale battery cells designed for grid stability. These batteries address fluctuating electricity demands and represent a $2.5 billion global market. However, Kokam’s NMC batteries were not used in SolarEdge's residential energy storage systems, which depend on LFP batteries sourced from other suppliers. As a result, the closure is unlikely to impact SolarEdge’s residential operations, its primary revenue driver.
In 2023, SolarEdge generated $160 million from energy storage, a small fraction of its $2.8 billion solar revenue. The company has implemented three rounds of layoffs this year, reducing its workforce from 5,000 to approximately 3,700 employees. These layoffs reflect the company's struggle with declining demand in Europe due to product oversupply and reduced U.S. residential solar project profitability amid rising interest rates. SolarEdge’s market valuation has plummeted from nearly $20 billion to less than $1 billion.
SolarEdge’s revenue in the third quarter of this year totaled $260.9 million, marking a 64% decrease compared to the same period last year. In the company’s primary solar division, revenue was $247.5 million, representing a 63% decline year-over-year.
SolarEdge’s operating expenses (non-GAAP) reached $116 million, a 1% increase compared to the previous year. Non-GAAP losses per share jumped to $15.33 from $0.55 in the same quarter last year.
The company's leadership is also undergoing significant changes. CEO Zvi Lando stepped down in August but remains a director and consultant. Ronen Faier, previously CFO, was named interim CEO. Chairman Nadav Zafrir also left his role to become CEO of Check Point, although he remains on SolarEdge's board.
These steps aim to stabilize SolarEdge as it navigates a severe crisis marked by declining demand, excess inventory, and plummeting stock performance. The company’s strategic pivot and leadership reshuffle highlight its bid to reclaim its position in the solar industry.
