Enphase Energy says it will bring down its global employee count by around 17% or 500 people
It will also stop contract manufacturing operations in Mexico, and focus on the US, India and China factories
Move ‘necessary’ in the current market environment to bring focus on core products
Slowing demand from the US residential solar PV market and policy changes in Europe have another casualty with US-based solar PV microinverter manufacturer Enphase Energy announcing plans to cut down its global workforce by approximately 17%.
Additionally, it plans to cease its contract manufacturing operations in Guadalajara, Mexico. It will now operate from 4 locations – 2 in the US and 1 each in India and China. The management said this will not bring down its global microinverter manufacturing capacity, which will remain steady at around 7.25 million units/quarter. 5 million of these units will be manufactured in the US.
This decision follows the company’s December 2023 announcement to lay off about 10% of its global workforce in an effort to streamline its operations. Back then, it shared plans to cease contract manufacturing facilities in Romania and the US’ Wisconsin (see Troubled Times For US Solar PV Industry?).
In a letter to the employees dated November 8, 2024, as included in its US Securities and Exchange (SEC) filing, Enphase President and CEO Badri Kothandaram said, “A combination of factors —including reduced U.S. residential solar demand due to high interest rates and declining demand in Europe due to policy changes and utility rate adjustments— has contributed to sustained unpredictability in our industry.”
Enphase’s Q3 2024 revenues of $380.9 million declined by more than 30 year-on-year (YoY). ROTH MKM analysts also believe the company faces risk from the growing presence of Tesla’s Powerwall 3 going forward (see US Market Drives Enphase Energy’s Q3 2024 Revenues).
“Given the slower revenue growth, we need to lower our nonGAAP operating expenses to target between $75 million and $80 million per quarter for 2025. Meeting this target requires us to make these difficult yet necessary adjustments,” added Kothandaraman in his letter announcing these measures as part of the company’s restructuring plan.
These measures are to be implemented by H1 2025. With these, it expects GAAP operating expenses for Q4 2024 to increase by approximately $14 million of restructuring and asset impairment charges.
Enphase stressed, “These decisions are grounded in the current economic landscape, not due to recent election outcomes. While the Inflation Reduction Act (IRA) has supported U.S.-based manufacturing, our primary focus remains on creating a resilient and self-sustaining business model that will drive our long-term success.”
Nevertheless, Donald Trump’s victory in the 2024 US Presidential Elections lowered the stock values of several solar PV companies, including Enphase’s, by about 17% (see Fate Of US Solar PV Industry Under Donald Trump 2.0).
Kothandaraman also pointed to the other companies that are facing significant cash flow issues, due to ‘ongoing challenges from a tough 2023 solar market’ that have continued to impact the company and industry partners throughout 2024. A case in point is SunPower, a leading name in the US residential solar segment (see SunPower Corporation & Subsidiaries File For Bankruptcy Protection Under Chapter 11).