Two big players in the renewable energy space are calling it quits. Panasonic and Tesla ended their solar cell manufacturing partnership at Gigafactory 2 in Buffalo, New York, this week.
The companies initially formed a joint venture in 2016, agreeing that Panasonic would help pay for part of the solar production equipment at Tesla’s facility in Buffalo, Nikkei Asian Review reported. Gigafactory 2 started manufacturing solar panel components the following year.
“Called the Solar Roof, the Tesla product is designed to look like regular black roof tiles,” the Nikkei journalists wrote. “But Panasonic-made cells are believed to have failed to achieve this look while also maintaining the efficiency and cost sought by the US company.”
On Wednesday Panasonic released a statement saying that the company plans to cease US solar manufacturing operations by the end of May, and will exit the Buffalo facility by the end of September 2020.
Citing the decision as part of an effort to streamline its global solar operations, Panasonic said that the decision won’t affect their partnership with Tesla in Nevada, where the companies are working on electric vehicle batteries at Tesla’s Gigafactory 1 outside of Reno. However, as CNBC’s Lora Kolodny pointed out, Tesla has already formed partnerships with battery cell makers CATL and LG Chem.
“Panasonic hopes to cut costs by shutting down underutilized production lines,” Nikkei reported. “It will approach existing clients about supplying them with solar cells from Chinese partner GS-Solar.”
Possible Setback for American Solar Cell Production
Investors are currently scrutinizing Tesla’s renewable energy operations, Nikkei noted. CNBC’s Kolodny reported that Tesla’s energy revenue declined by more than $24 million over the course of 2019. Last year Walmart sued the company for an undisclosed amount over rooftop panel installations at stores in the United States.
“Tesla’s CEO and chief product architect, Elon Musk, is in the midst of a battle with the company’s shareholders, who sued the electric car maker in 2017 over its $2.6 billion acquisition of SolarCity,” Kolodny wrote. “Some shareholders say the deal never should have happened and amounted to a bailout for Musk and his cousins, Lyndon and Peter Rive, who started SolarCity.”
The split with Panasonic in Buffalo could represent a blow for national solar cell production, according to Greentech Media’s Emma Foehringer Merchant.
“The US International Trade Commission recently delivered its midterm review of Section 201 solar tariffs to President Trump,” she wrote. “The review concluded that, although US module manufacturing has increased in response to the duties, Panasonic’s portion of the Buffalo plant is the country’s only operating cell manufacturing facility.”