SolarEdge workforce reduction of about 16% of its current employees was announced on Sunday. The clean energy solutions company’s decision is part of its strategic plan to reduce operating costs amidst challenging market conditions.

Chief Executive Zvi Lando described the move as a “very difficult, but necessary decision” aimed at aligning the company’s cost structure with the evolving market dynamics. About 500 of these layoffs will impact the manufacturing sites of SolarEdge, a prominent player in the solar power industry based in Israel.

“We have made a very difficult, but necessary decision to implement a workforce reduction and other cost-cutting measures in order to align our cost structure with the rapidly changing market dynamics,” said Zvi Lando.

This workforce reduction follows a series of scaling back operations by the company, including the termination of manufacturing in Mexico, downsizing production capacity in China, and abandoning plans to construct a light commercial vehicle.

Further details on the company’s restructuring efforts are expected to be disclosed in the upcoming earnings release scheduled for the end of February.

The company’s financial health has been under scrutiny, with SolarEdge shares (SEDG) witnessing a significant 77% decline over the past 12 months. Notably, the company reported an unexpected loss in the third quarter of last year, attributing it to a slowdown in solar installations. Concurrently, SolarEdge projected considerably lower sales for the current quarter.

The solar energy sector, in general, has been experiencing a downturn. Industry peers such as SunRun Inc. (RUN), Enphase Energy Inc. (ENPH), and SunPower Corp. (SPWR) have also seen their stock values decrease substantially over the last year, reflecting a broader trend of weakening demand in the solar panel market. This decline is largely attributed to high interest rates and reduced demand.

Particularly in Europe, the growth of the solar market has been hampered by excess inventories and diminishing demand. The United States, which has traditionally been a robust market for solar, is also witnessing a downturn. Factors such as higher interest rates and metering reforms in California, a key solar market in the country, have contributed to this reduced demand.

SolarEdge workforce reduction is indicative of the broader challenges faced by the solar industry in adapting to the current economic landscape and market demands.

Image Source: Solar Electric Supply