The National - News

Panasonic exits Tesla’s solar cell plant in New York

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Panasonic said it would exit solar cell production at Tesla’s New York plant, the latest sign of strain in a partnershi­p where Panasonic’s status as the US electric vehicle maker’s exclusive battery supplier is ending.

The move increases uncertaint­y over Tesla’s solar business which is already under scrutiny, having been drasticall­y scaled back since the US company bought it for $2.6 billion (Dh9.5bn) in 2016.

Tesla has said Panasonic’s withdrawal “has no bearing on Tesla’s current operations”. The company employs more than 1,500 jobs in the city of Buffalo, clearing its 1,460 commitment before April – and thereby avoiding a $41 million penalty – the New York state said.

Panasonic said yesterday that it would cease production by the end of May and exit the factory by the end of September.

The withdrawal comes as Panasonic scrambles to divest of unprofitab­le businesses as its strategic shift to components from consumer electronic­s struggles to drive profit growth. It is also another sign of a fraying partnershi­p with the US EV maker, which is set to diversify its battery supplies to include South Korea’s LG Chem and China’s Contempora­ry Amperex Technology.

Panasonic said it would continue its automotive battery joint venture with Tesla in the US state of Nevada, which just reported its first quarterly profit after years of production problems and delays.

In the solar business, low demand from Tesla has left Panasonic sending most of the cells it makes in Buffalo to overseas clients, instead of selling them to Tesla for its trademark Solar Roof – cells designed to resemble regular roof tiles - as initially intended.

When announcing the solar partnershi­p in 2016, Panasonic said it would invest more than ¥30bn ($271.96m) in the Buffalo plant. Tesla’s long-term purchase commitment was part of the deal.

Panasonic has already shrunk its own solar business elsewhere as it contends with competitio­n from cheaper Asian rivals.

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