Abound Solar, which makes cadmium telluride thin-film solar panels, and had been awarded a $400 million conditional loan guarantee by the U.S. Department of Energy, announced yesterday that it is stopping production at its 65-megawatt factory in Colorado and laying off 180 workers.

Is this the death knell for the company? Will Abound Solar sink into bankruptcy as many other solar panel companies have in recent months, including fellow DOE loan awardee Solyndra?

The company is presenting the work stoppage in a positive light, as a chance for it to switch to making higher efficiency solar panels that will have a lower cost per watt than its current panels. It plans to install new equipment and start producing higher-efficiency solar panels by the end of the year. This could be a good move. The market for solar panels right now is difficult for any solar panel manufacturer—an oversupply of panels has led to very low prices. Abound was probably losing money on its existing solar panels. It sounds like it hopes to weather the storm, and emerge with more cost-competitive solar cells at a time when the market may have recovered some. Indeed, the company cited “current market conditions” as the reason for the timing of the stoppage. According to Bloomberg, one market analyst says it makes sense for Abound to conserve cash for now. 

That said, it’s unclear how Abound can survive when even its far larger competitor, fellow cadmium-telluride solar-panel maker First Solar, is struggling. Yesterday First Solar announced an unexpected fourth-quarter loss, which sent its stock price plummeting today (down 11 percent by the close). The company cited unexpectedly low demand for solar panels as part of the reason for the loss, and it is decreasing production as a result.

What does Abound  have to offer that will help it compete with First Solar? Abound is talking up the importance of panel efficiency. It says that the panels it hopes to produce by the end of the year will be about 12.5 to 13 percent efficient. But by the end of the year, First Solar has said that its average panels will also be about that efficient. And that seems plausible: its best panels are already better than that, at 14.4 percent efficient.

That leaves competing on cost. Abound says its production process has the potential to be cheaper than First Solar’s, since it’s faster and uses fewer machines. But at low-scale production, it’s difficult to achieve the desired costs. 

Abound’s best hope may be that the market for solar panels recovers this year, creating enough demand for both First Solar and Abound until it has a chance to scale up production. (First Solar itself was able to scale up production during a time of extremely high demand for solar panels.)

Abound is a private company, so it doesn’t publish financials, making it difficult to judge how long the company can operate before it has to turn a profit. It still has $330 million to draw from the DOE loan guarantee, but it likely can’t access that money without hitting production or revenue milestones that are part of the terms of the loan. The failure to meet such milestones recently kept Fisker Automotive from drawing on its loan money.