A half-built Peloton facility will see new life as First Solar builds out its U.S. operations.
Anybody remember Peloton?
A few years ago Peloton was cruisin’. This company, which started with a crowdfunding campaign to sell exercise bikes with monitors attached to them so users can participate in group workout classes, had developed a loyal following and millions of dollars in subscription revenue. It staffed way up. It opened a physical location in New York City, where people who bought these bikes could come and meet other Peloton people and take exercise classes in person. They started selling treadmills, yoga classes and interval training instruction videos. By the height of the pandemic – when a lot of America was isolating or quarantining and looking for something to do – Peloton had achieved tremendous success, and a market capitalization of $50 billion. For an exercise bike company!
I like exercising as much as the next guy, but the money people saw in this company left me gobsmacked. What do you think NordicTrack was worth back when it was hot? Chuck Norris pitched the Total Gym forever, remember that? No way he got close to $50 billion.
Anyway. Flush with cash and riding high, Peloton in May 2021 announced plans to build a $400 million factory in Ohio where it would employ 2,000 people making its bikes and treadmills.
But its fortunes had already begun to change. An accident in March of that year involving one of its treadmills resulted in the death of a child, and then dozens of other injuries were reported, and then the Consumer Product Safety Commission urged consumers to stop using Peloton’s treadmills “immediately,” and then the company issued a recall.
Then in November 2021, as pandemic restrictions began to ease and people started exercising outside again and returning to gyms, its earnings took a 34% hit.
Then a Peloton bike was featured in the first episode of the rebooted “Sex and the City” TV show with Peloton’s blessing, but the character (spoiler, it was Mr. Big) suffered a heart attack and died right after finishing a workout! The company’s stock dipped immediately and significantly.
Then, in early 2022, as it announced corporate layoffs and its CEO stepped down, it paused its plans for an Ohio exercise bike and treadmill factory and left its facility half constructed. Later that year it moved all its manufacturing to Taiwan, where a company there already made a portion of its products.
Peloton is still a company from which you can buy a $2,500 exercise bike or a $6,000 rowing machine, and it’s also been trying to sell its Ohio facility. Until now.
It found a buyer!
Count First Solar among the renewable energy companies currently thriving in the United States. The manufacturer just bought another factory space in Ohio to serve as a distribution center for the solar panels it makes in nearby Perrysburg, because its business is booming. This is thanks to the passage of the Inflation Reduction Act (IRA), a whole wing of which is devoted to promoting the domestic production of alternative energy equipment.
Yessir. The production of wind turbines got a tax credit in the 2022 bill. So did battery manufacturing and hydropower. The IRA represents the U.S.’s largest commitment to domestic energy manufacturing in decades, totaling either $391 billion or $1.2 trillion over the next 10 years, depending on your source.
Investment in the manufacturing of these renewables, and particularly solar, skyrocketed last year in response to the IRA’s passage. Solar factories are being built in Alabama, New Mexico and Washington. A planned Georgia plant recently announced by QCells will be the first fully integrated solar manufacturing facility in the country. And the executives behind these projects all cite the IRA’s incentives as a major factor in their decisions to break ground.
First Solar, the manufacturer behind that aforementioned Alabama facility, is planning another facility in Louisiana and will spend $2 billion between the two projects. The company, according to Electrek, expects to “have 14 GW of fully vertically integrated US solar manufacturing capacity by 2026.”
It’s a bummer Peloton’s manufacturing plans didn’t work out, but we’re glad to hear that facility in northwest Ohio will be put to use.