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Tesla plans to close more than a dozen solar facilities; Bernstein analyst questions electric-car maker's margins

The company ended its retail partnership with Home Depot last week
A Tesla logo on a showroom
More than a dozen facilities are shutting their doors across nine states

Tesla Inc (NASDAQ:TSLA) plans to close more than a dozen solar installation facilities as it scales back its SolarCity operations, according to a Reuters report.

Internal documents cited by the report suggest that the 9% workforce layoff announced last week will hit its solar segment the hardest. The company plans to close between 13 and 14 facilities, shutting its doors across nine states including California and New York.

The electric-vehicle maker acquired the sales and installation company two years ago for US$2.6bn.

READ: Electric car maker Tesla slashes 9% of its workforce as part of what Elon Musk calls a 'difficult, but necessary' reorganization

“We continue to expect that Tesla’s solar and battery business will be the same size as automotive over the long term,” said Tesla in a statement to Reuters.

Last week, the company ended its retail partnership with Home Depot (NYSE:HD) and will no longer sell SolarCity products there.

Fire at Fremont facility

There was a fire at Tesla’s Fremont factory Thursday night, according to a Reuters report. There were no injuries and the cause of the fire is being investigated.

"The structure outside our factory that houses the cardboard and other wood and paper products that are being recycled caught fire," said a company spokeswoman in a statement to Reuters.

An analyst weighs in

Bernstein analysts are concerned that Tesla’s margins may not add up.

As the service margins fall, analyst Toni Sacconaghi wonders whether its automotive gross margins are overstated. The analyst offered a possible explanation, stating that perhaps the services segment is being burdened with costs from the automotive segment.

READ: Tesla CEO Elon Musk emails employees about a possible saboteur in its ranks

Sacconaghi clarified that he is "not questioning Tesla's overall reported gross margins but rather the reported split between Automotive vs. Services & Other."

The analyst maintained a Market Perform rating with a price target of US$265.

Production expansion

In the company’s latest push towards its production goal of 5,000 Model 3s per week, Tesla has built a large tent to expand its production capacity, according to an Ars Technica report.

Each tent is 53-feet-high by 150-feet-long and connected together with aluminum framing, according to the report.

CEO Elon Musk defended the addition on Twitter, saying that it was "way better" than the factory building.

Shares of the California-based company fell more than 3% to US$336.86 in Friday afternoon trading.

--Updated to include details about tent and latest share price

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