Tesla Inc and Panasonic Corp plan to end their partnership in producing solar cells for rooftops at a facility in Buffalo, New York, according to people familiar with the matter.
Panasonic is withdrawing from the venture as part of the company’s broader recent move to curtail money-losing businesses, one of the people said, asking not to be named because the decision isn’t public.
The move comes after the two companies have struggled to ramp up production at the facility, known as Gigafactory New York, said the people.
They will continue to produce car batteries together at the original Gigafactory in Nevada.
Tesla and the Japanese company have had a tumultuous relationship since they unveiled an agreement in 2014 for Panasonic to make the batteries that power the American company’s electric vehicles.
Last year, Tesla’s billionaire chief executive officer Elon Musk directed a public attack on Twitter against the Osaka-based firm.
Just this month, Chinese rival Contemporary Amperex Technology Co won a two-year contract to supply batteries to Tesla.
Panasonic will formally decide on the Tesla partnership this afternoon and may announce the decision yesterday, one of the people said.
“We do not comment on speculation and rumour,” a Panasonic spokeswoman said. The company’s shares closed little changed in Tokyo.
Tesla did not respond to a request for comment late Tuesday.
The New York facility, subsidised by the state, needed to add about 360 more workers by April, bringing its total to 1,460 or pay a $41.2mn penalty. The head of the local development agency said that target has been reached.
“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,” Empire State Development Chairman Howard Zemsky said in a statement. “Tesla informed us that they have not only met, but exceeded their next hiring commitment in Buffalo.
As of today, Tesla said they have more than 1,500 jobs in Buffalo and more than 300 others across New York State.”
The New York facility is part of Musk’s effort to expand into solar power more broadly. The photovoltaic shingles it produces to form solar rooftops were a piece of the billionaire’s controversial push to acquire debt-ridden SolarCity Corp in 2016.
They were marketed to consumers as Tesla’s Solar Roof.
The factory has been slow to ramp up since output began in late 2017, with just one production line running a year later.
In early 2019, Musk said the plant was moving toward mass production, saying that it would be the “year of the solar roof.” But the glass tiles have yet to capture a significant piece of the market.
Tesla has begun rolling out the Solar Roof to customers in California, many of them affluent homeowners who already own Tesla’s electric cars.
The company is racing to hire roofers, installers and electricians in more than a dozen US states. “We are ramping the volume production of this version of the Solar Roof at Gigafactory New York, and are increasing our installation capabilities by training our personnel and third party partners,” Tesla said in its most recent annual report, filed early this month.
New York bet heavily on Musk’s ambitions, committing $750mn to build the 1.2-million-square-foot plant.
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