Trouble in SolarCity? Tesla backs off deal with Panasonic
Auto company won’t buy the entire output of the solar plant jointly run in Buffalo
TOKYO—Tesla Inc. has backed away from an agreement to buy all the output from a solar-panel factory it operates with Panasonic Corp., Panasonic said Thursday, another sign of the uncertain outlook for Tesla’s solar business, SolarCity.
The Japanese company said it began making solar cells and modules at the factory in Buffalo, N.Y., in August 2017, under a deal that called for Tesla to buy the entire output for its home solarpanel business. But Panasonic said the contract was revised early this year to remove the exclusivity, and since then it has been selling Buffalo-made solar modules to other panel makers.
Tesla is still buying some modules and cells from the plant as well.
The Buffalo factory is part of
the SolarCity home solar-panel business Tesla acquired in 2016.
SolarCity’s installations have been slowing as Tesla retreats from riskier financing arrangements.
Representatives of Tesla couldn’t immediately be reached
for comment.
The solar business is one of many challenges on the plate of Tesla Chief Executive Elon Musk, who is facing an investigation by U.S. securities regulators over a tweet saying he had secured funding to take the electric-car maker private.
The solar business has taken a back seat as Tesla pushes to get production of its Model 3 electric vehicles on track. In early July, the company said it achieved a long-delayed goal of assembling 5,000 Model 3 sedans in about a week last month.
Even though demand from Tesla has fallen short, Panasonic said overall demand for its U.S.made solar panel components remained intact because of tariffs the Trump administration placed on imported panels earlier this year.
That has hit Chinese-made panels, which previously had a big share.
The Japanese firm had said it planned to spend ¥30 billion ($271 million) to beef up production lines in the Tesla-owned Buffalo facility, and on Thursday it said the plan was unchanged.
Panasonic’s solar business in its home market has been losing money after the Japanese government cut subsidies and demand for panels stagnated.
Analysts said the contract change with Tesla raised concerns over whether Panasonic, an Osaka-based industrial and consumer-electronics conglomerate, could face similar problems in the U.S. Panasonic’s shares fell 2.1% in Tokyo trading Thursday, while the overall market was flat, after the Nikkei newspaper reported on the contract revision.
Panasonic’s co-operation with Tesla in the solar business, first announced in 2016, was aimed at strengthening ties between the two companies, which have worked closely together on electric cars since Tesla’s early days. The two companies jointly invested in the Gigafactory facility in Nevada, which supplies batteries for the Model 3.