In an eventual public acknowledgement of a strained partnership, Panasonic has announced its exit from the joint production venture of solar cells at Tesla’s Gigafactory 2 facility in New York.
Tesla and Panasonic came together in 2016 to manufacture solar cells. As part of their deal, Panasonic committed to paying for part of the equipment at the plant in Buffalo, New York. They began producing components for solar photovoltaics there in 2017.
The solar cells produced by Panasonic at the Gigafactory in Buffalo were also to be utilized for Tesla’s Solarglass tiles venture, which are solar roof panels designed to look like regular roof tiles, but the solar cells produced by the Japanese electronics company reportedly failed to achieve such look. There were earlier reports that the latest version of the Solar Roof uses solar cells from China with Panasonic ending up distributing its Giga New York-produced solar cells to other clients and Japanese homebuilders.
The termination of the solar joint venture of Tesla and Panasonic comes a few weeks after the announced its battery partnership with China’s Amperex Technology Co Ltd.
This however, won’t affect the ongoing Panasonic-Tesla partnership for automotive batteries. Panasonic is still the main supplier of battery cells to Tesla for its vehicle battery packs and has said that it would continue its automotive battery joint venture with Tesla in the U.S. state of Nevada. The venture just reported its first quarterly profit after years of production problems and delays, however, Tesla has also been forging ties with battery cell makers CATL in China and LG Chem in South Korea.
The Empire State Development (ESD) that’s responsible for encouraging business investment and job creation in the state of New York confirmed the fallout between Tesla and Panasonic.
“We understand that Panasonic has made a corporate decision to move away from global solar products, but this action has no bearing on Tesla’s current operations nor its commitment to Buffalo and New York State, according to Tesla,” said ESD Chairman Howard Zemsky.
Tesla has been under pressure to revitalize its solar business. Even with a record fourth quarter for its solar energy and storage systems business in 2019, Tesla’s energy revenue declined by over $24 million over the year, after several rounds of layoffs that started the prior year.
Tesla will be absorbing most of the 400 workers of Panasonic in its facility in New York. The Gigafactory in New York currently employs around 1,100 workers aims to up that number to around 1,500 workers by April as it looks to dodge a $41.2 million penalty to the state of New York.
Tesla has been setting the stage for Solarglass roof installation as 2020 kicked off with a hiring spree to boost its solar energy team.
“The demand is very strong and we are working also not just through Tesla Solar Roof, but also through new homebuilders and through just the roofing industry in general, whether is in North America on the order of 4 million new roofs per year,” Tesla CEO Elon Musk said during the company’s 2019 Q4 earnings call.
The Giga New York facility has also ramped up the production to meet the goal of Tesla’s energy business as evidenced by a big jump to 54MW deployment in the Q4 of last year from Q3’s 43MW.
Elon Musk has been very optimistic about Tesla’s energy business.
“…the really crazy growth for as far into the future as I can imagine. … It would be difficult to overstate the degree to which Tesla Energy is going to be a major part of Tesla’s activity in the future,” Musk said during a call with the analysts.
