Tesla’s solar future under scrutiny after Panasonic split

Source: By David Iaconangelo, E&E News reporter • Posted: Thursday, February 27, 2020

Panasonic announced this week that it would end its solar partnership with Tesla, raising new questions about the auto giant’s renewable business.

Tesla Inc. is in the midst of a reboot of its struggling solar operations, having recently unveiled a new iteration of its solar roof — a series of power-generating glass tiles that resemble regular house shingles.

“Tesla has struggled to commercialize its solar roof,” said Benjamin Torda, a research associate at Lux Research Inc., in an email to E&E News. “Panasonic is in the process of divesting from unprofitable businesses, and Tesla’s solar roof is far from a clear money maker.”

The partnership between Tesla and Panasonic Corp. on solar and EV batteries had become more strained over time. Last April, Tesla CEO Elon Musk blamed Panasonic’s pace of battery-cell production for slowing output of the Model 3 in a Twitter post.

A month later, Reuters reported that Panasonic had begun selling most of the solar cells manufactured at Tesla’s Buffalo factory to foreign buyers.

Panasonic said it plans to wrap up manufacturing of solar cells and modules at Tesla’s factory in Buffalo by May of this year and move out of the facility by September, according to a statement yesterday.

It described the change as part of a “broader streamlining of its global solar operations,” adding that it would continue to sell its own solar panels in the United States.

The statement also downplayed the significance of the split for Panasonic’s partnership with Tesla on electric vehicle batteries, and for Tesla’s solar business at large, saying it would have “no impact” on either.

According to Torda, the end of the partnership was unlikely to affect the company’s push to make solar roofs a major source of revenue.

“Tesla will be able to switch suppliers easily, as the market is flush with cheap solar cells from other Asian manufacturers,” he predicted.

Tesla is also seeking to become less dependent on Panasonic for its EV-battery cells, as it pushes for a massive increase in car production.

It has inked deals with China-based CATL to make cells for Model S cars sold in China, noted Chloe Holzinger, an analyst who leads energy-storage research at Lux.

Tesla is also said to be exploring in-house production of battery cells at a lab near its Fremont, Calif., factory.

“Ultimately, Tesla hopes to become more vertically integrated and manufacture its own Li-ion cells,” she wrote in an email to E&E News, adding that the explorations in Fremont were “its first strong step towards achieving this goal.”

An ‘impacted workforce’

The announcement came one day after economic development authorities in New York said that Tesla had fulfilled its pledge to the state to hire at least 1,460 employees at the Buffalo solar factory by April.

Tesla had faced a $41 million penalty if it didn’t comply. That commitment was part of a $750 million incentive package brokered with the state, which has sought to build clean energy industries in former industrial areas.

“Tesla informed us that they have not only met, but exceeded their next hiring commitment in Buffalo,” said Empire State Development Chairman Howard Zemsky in a statement.

Over 1,500 people were employed at the factory, according to Tesla, he added.

Asked if any of the Tesla employees had been hired away from Panasonic’s workforce at the factory, spokespeople for ESD and Tesla did not provide comment.

But at least some of the Panasonic workers left unemployed after the company’s departure could end up at Tesla.

Panasonic’s announcement said Tesla planned to hold on-site job fairs and hire members of the “impacted workforce.”

“Tesla hopes to hire as many qualified Panasonic applicants as possible,” it said.