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Why Bosch should exit the Solar Panel Market ,Stop Throwing Good Money after the Bad

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Bosch which is one of the biggest automotive component suppliers on the planet has made one mistake after the other in the solar panel market. Despite entering the solar panel market 4-5 years ago with billion dollar acquisitions it does not figure even in the top 20 global solar panel manufacturers. The massive solar panel price crash in 2011 has made most German solar companies either bankrupt or on the borderline. Bosch Solar Panels has been no exception as German solar panel costs are too high for the current prices. It had decided to expand in Malaysia to compete with the super low cost Chinese solar modules following in the footsteps of companies like Q-Cells and First Solar.

However it has now thankfully put its plan on hold of spending another 520 million euros on solar energy. The company has already wrote down $1 billion in solar after the valuations of Ersol and Aleo have crashed from the time it bought it. Note most Western solar companies are going bankrupt as they can’t compete with the 80c/watt solar panel prices. Stalwarts Q-Cells are defaulting on the debt payments while according to Total CEO, Sunpower would have been bankrupt if they had not bought it. Even the biggest US Solar Panel Company First Solar has been ravaged by the price war. Bosch has bravely said that it would continue to remain in the solar panel market while it makes more sense for them now to make an exit and concentrate on their core competencies. It can realistically never hope to get into the top 20 solar panel suppliers and stop spending good money after the bad.

Bosch Acquisitions in Solar Energy

Bosch started out into the Solar Energy field by making a very expensive acquisition of a Tier 2 German solar company Ersol in 2008 for Euro 1.1 billion.Bosch paid a premium of 60% for buying out Ersol which was a manufacturer of wafers,cells and modules.The company paid a very price to buy Ersol which was a jack of all trades kind of solar company without any substantial competitive advantages.Bosch had set a target of Euro 750 million from renewable energy (don’t know whether they met it ).Bosch made a bad decision because at the current stock prices  it can buy almost the entire German solar panel manufacturing sector for Euro 1.1 billion.Its doubtful that Ersol would have survived the current solar panel downturn and was extremely lucky to get bought by Bosch for that price.The company also bought two other small German solar companies at expensive valuations Aleo Solar and Johanaa Solar (a thin film solar panel producer).It could have similarly bought these companies or even better companies at much cheaper prices.

Bosch  now moves to Malaysia as its European Factors are unviable (Billions go to Waste)

After sinking more than a billion euros into buying very expensive manufacturing facilities in Germany,Bosch has now decided to move to Malaysia.With European solar factories getting shutdown due to low cost competition from China,it was only a matter of time.Now Bosch has decided to invest Rmb 2.2 billion to set up new fully integrated photovoltaic manufacturing plant in Penang

Bosch Solar Panels Review

Bosch makes Solar Panels not only of the mainstream crystalline silicon type but also sells thin film solar panels which it acquired from Johanaa.Bosch Solar Panels are of good quality being made in German factories where quality control is good.However the cost and price factor is a problem as Bosch Solar Panels are much more expensive than the cheap solar panels being made by Chinese low cost panel manufacturers.This is the reason that Bosch is being forced to move to Malaysia as European solar panel manufacturing is facing huge headwinds.

Bosch says still committed to Penang solar panel plant

In order to achieve economies of scale in production costs, Bosch is currently evaluating the most technologically advantageous direction for the plant.

“We will therefore be adjusting the commencement of the construction to a later time in 2012,” Robert Bosch (South East Asia) Pte Ltd president and managing director Martin Hayes said.

Hayes, who is also managing director of Robert Bosch Sdn Bhd, also stressed that the Stuttgart-based company would push ahead with the internationalisation of solar cells despite the current difficult market conditions.

Bosch’s decision to hold off on the fully-integrated manufacturing plant, which would have served its Asean operations, comes after the firm missed profitability targets last year as special charges ate into earnings.

Franz Fehrenbach, chief executive of the Stuttgart-based company, said last month Bosch booked an earnings charge of around €1 billion (RM3.94 billion) in 2011 due to upfront costs for its push into the fields of electric mobility and renewable energy, as well as currency fluctuations.

Western Solar Bankruptcies

The Chinese Dominance of the Solar Industry in the last 2 years have seen numerous Western companies go bust . This has accelerated sharply in 2011 with companies like Evergreen Solar,Spectrawatt, Solar Millenium, Solon, Photowatt etc. either gone for good or in various stages of bankruptcy. Other US Solar Panel Manufacturers like First Solar, Sunpower have fired thousands and some are continuing with large losses. European Solar Companies are the worst off given their high cost structure and lack of differentiation. Solland Solar recently killed its solar module line while some like Schott have killed their solar wafer lines.

Now a new wave of bankruptcies are on the way with Q-Cells likely facing a credit event as it needs to roll over convertibles which come due in February. Note Q-Cells has fallen a long way from being the biggest solar cell company in 2008. Miasole and Nanosolar were Private Equity backed CIGs darlings that were supposed to become the biggest thing following Firsst Solar . Now Nanosolar faceds executive exits while Miasole has fired large number of its workforce failing to find a big parent to support it. Note the smaller companies like Ascent Solar have found backers in Asia . Solar Technologies are seeing Darwin Survival of the Fittest with crystalline silicon solar panel technology beating out thin film solar and solar thermal technologies


Abhishek Shah

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