Tesla Ends Partnership With Home Depot

June 12, 2018, 8:18 PM UTC

Tesla is ending its partnership with Home Depot and will remove its branded kiosks from as many as 800 of the home improvement chain’s U.S. stores by the end of the year.

The move is sudden reversal for Tesla, which has spent the past six months trying to expand its presence in Home Depot stores.

The Tesla-branded kiosks were designed to educate consumers and ultimately generate sales of its residential rooftop solar panels and Powerwall, a battery it designed for homes that store the energy generated by solar panels. In February, Tesla said it was setting up the kiosks in more than 600 stores and had plans to be in as many as 800.

A Home Depot spokesman said Tesla was in 800 stores. Home Depot has 2,200 locations in the U.S.

Home Depot’s relationship with Tesla will continue through the end of the year, a Home Depot spokesman told Fortune. The change doesn’t affect Home Depot’s plans to continue offering solar options to its customers, the Home Depot spokesman added.

A Tesla spokesman confirmed that the kiosks would be phased out through the end of the year. The home energy products will be moved to Tesla’s retail locations. The automaker has 300 retail locations worldwide.

It’s unclear how long Tesla has been preparing to make this move. However, insight from Tesla employees, who noted the company had recently hired new employees for its home energy team, suggests it was an abrupt decision.

Tesla told employees who work in the company’s home energy department that it would not renew its residential sales agreement with Home Depot during a brief all-hands conference call Tuesday morning, according to a Tesla employee who asked not to be named.

An email sent by CEO Elon Musk later Tuesday morning, obtained by Fortune, confirmed that the company was exiting its partnership with Home Depot. The majority of Tesla employees working at Home Depot will be offered the opportunity to move over to Tesla retail locations, Musk wrote in his email.

Musk’s memo, which was sent to all employees, also announced that the company was cutting 9% of its total workforce as part of a reorganization designed to reduce costs and help the electric automaker become profitable. Tesla started 2018 with about 37,000 employees globally, according to documents filed with the U.S. Securities and Exchange Commission. Company insiders told Fortune that it has hired thousands of employees in the past six months.

Just a day before Tesla announced it was exiting Home Depot stores, managers were instructed to have employees in the home energy team, specifically those who worked at these kiosks in Home Depot, complete a two-hour training on Tesla vehicles and then pass a test on that material by midnight, the employee told Fortune.

A Tesla spokesman couldn’t comment on specific details of the transition, but confirmed that the majority of Tesla home energy employees would be transitioned over to Tesla stores.

The company confirmed that the exit is not a signal that its pivoting away from its residential solar or energy storage products.