SolarEdge Technologies announced today that it is ceasing all activities of its energy storage division, resulting in about 500 layoffs, accounting for approximately 12% of the company’s headcount.
Most employees set to lose their jobs are located in South Korea, according to SolarEdge, and will be dismissed over the first half of 2025.
SolarEdge claims this will not impact the solar business sale of batteries for residential and C&I markets, indicating this decision only impacts the manufacturing of lithium-ion battery cells that serve utility-scale projects.
In a Form 8-K filed with the U.S. Securities and Exchange Commission (SEC), SolarEdge said it is taking these actions “as part of its execution of its commitment to focus on its core solar activities.” The company contends this decision follows others it has made to align with current market conditions, including a 16% global workforce reduction announced earlier this year and previous adjustments to its solar manufacturing capacity.
In a press release, SolarEdge indicated it expected to save about $7.5 million in expected quarterly operating expenses, with the full run rate expected to be achieved by the second half of 2025. The company intends to sell the assets related to its storage division activities, including its manufacturing facilities for battery cells and packs.
“The decision to close our Energy Storage division was the result of a thoughtful analysis of our portfolio of businesses and product lines, industry trends, and the competitive environment,” detailed Ronen Faier, the interim chief executive officer of SolarEdge. “The measures also represent continued execution of two of our main priorities: financial stability through cost reduction, return to cash flow positivity and profitability; and focus on our core business lines of solar, PV-attached storage and energy management capabilities. I wish to thank our Energy Storage division employees for all of their efforts in building this business.”
In connection with dropping its storage division, SolarEdge expects to record aggregate pre-tax discontinuation and asset-related charges of between $81 million to $99 million, primarily comprised of between $40 million to $49 million of asset-related and impairment charges, between $30 million to $37 million of costs related to inventory write-offs, and non-cancelable purchase orders and between $4 million to $5 million of severance and related benefit costs (excluding stock-based compensation expense). Charges related to SolarEdge’s workforce reduction will be recorded mostly in the fourth quarter of 2024 and in the first quarter of 2025. Asset impairments, inventory write-offs, and non-cancelable purchase orders costs will be recorded mostly in the fourth quarter of 2024.
Future cash payments related to these charges are anticipated to be between $38 million to $46 million, primarily related to the payment of severance and related benefits and non-cancelable purchase orders. The company expects to offset all cash payments related to these charges through the collection and sale of the related energy storage division assets, including the divestiture of its manufacturing facilities for battery cells and packs in South Korea.
The company notes its discontinuation efforts are ongoing and could result in additional costs above the estimates included in its SEC filing.
SolarEdge’s layoffs earlier this year impacted about 900 employees, 500 of whom worked at the company’s manufacturing sites. The move followed SolarEdge’s discontinuation of manufacturing in Mexico, reduction of manufacturing capacity in China, and termination of its light commercial vehicle e-mobility activity.
