Tesla CEO Elon Musk. Photo: Joshua Lott/Getty Images

A residential solar business bought by Tesla a few years back will be "sharply" downsized because of the company's decision to cut 9% of its employees, Reuters reported Thursday.

Why it matters: The downsize raises questions about the company's viability. Tesla is not only closing facilities in several states, but is also ending an integral retail relationship with Home Depot.

The details: The closures will hit offices in New Hampshire, Connecticut, Arizona, Delaware, Texas, New Jersey, California, Maryland, and New York. There were also employees laid off in Nevada and Utah.

What they're saying:

  • The ending of Tesla's relationship with Home Depot "blindsided" employees because the company previously announced that there would be an expansion, Reuters reports.
  • A former employee told Reuters that the Home Depot partnership brings "in all the revenue."

Tesla told Axios in a statement: "Our energy products are critical to our mission to accelerate the world’s transition to sustainable energy, and we continue to expect that Tesla’s solar and battery business will be the same size as automotive over the long term. One of the main reasons we acquired SolarCity was to use our Tesla stores to sell not only cars, but also Powerwall and Solar. Tesla stores have some of the highest foot traffic of any retail space in the country, so this presents a unique benefit that is demonstrated by the growing number of Tesla vehicle customers who are also purchasing energy products through our stores. The reorganization that we announced last week does not impact this.”

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