Local News Tesla claims its on-target for investment & jobs in Buffalo. Eileen Buckley 3 – WKBW-TV

Local News Tesla claims it\s on-target for investment & jobs in Buffalo. Eileen Buckley 3 - WKBW-TV
Teslas trumpeted solar shingles are a flop
Teslas 2016 acquisition of SolarCity is looking worse and worse. And its $1 billion solar gigafactory in Buffalo, New York, which the state built, subsidized, and equipped for SolarCity, seems to be primarily operating as a Panasonic plant.

The news: The overwhelming majority of the solar cells produced at the facility are now being sold overseas rather than being used in Teslas Solar Roof photovoltaic product, according to a Reuters report on Wednesday, citing a letter to US customs officials from Panasonic, Teslas partner on the plant.

That product was designed to resemble rooftop shingles with solar cells embedded inside, an effort to differentiate the offering in the commodity solar panel business. But the line appears to have been a flop. Californias utilities have connected only 21 such systems, according to state data obtained by the news service. And just a few were installed in the Northeast, Reuters reported, citing an anonymous former employee.

Tesla Inc (NASDAQ: TSLA) is exporting a "great majority" of the solar cells being produced at its New York factory, instead of using them in its Solar Roof system as intended, according to Reuters.

In the more than two years since Tesla acquired SolarCity, its overall solar installations have plummeted by more than 76%.

Panasonic produces the solar panels at the Buffalo plant for Tesla, but Reuters said it has been selling many of them to other buyers since last year due to low demand from the California automaker. 

Tesla Supercharger V3 Production Underway At Gigafactory 2

A Tesla spokesperson told Reuters its actively installing the Solar Roof product in eight states but declined to discuss its purchases from Panasonic or provide overall installation numbers.

The two firms announced a partnership in 2016 and said they would collaborate on cell and module production. Tesla made a long-term commitment to buy the cells from Panasonic. 

The background: Tesla bought SolarCity for $2.6 billion in late 2016, in a deal that was heavily criticized because of SolarCitys huge debt load and Tesla chief executive Elon Musks connections to the company. He had been the chairman of SolarCity and is a cousin of the cofounders, Peter and Lyndon Rive, both of whom have since left.

Last month, Tesla reported a 36-percent slide in its overall solar sales in the first quarter, adding to previous big drops since the SolarCity acquisition.

Soon after, Tesla unveiled the Solar Roof line, a marked shift from the business model of SolarCity, which primarily sold and installed rooftop solar panels produced by Chinese manufacturers. Tesla also struck a deal to buy custom solar cells for its products from Panasonic, which in turn agreed to invested $250 million into the gigafactory and set up its own production line there.

Tesla has only sporadically purchased solar cells produced by its partner Panasonic Corporation (OTC: PCRFY), Reuters said in the Wednesday story.

The subcontract also provided a way to help Tesla achieve hiring commitments required as part of the states $750 million in subsidies. But it still appears likely to fall short of the nearly 1,500 employees required by 2020, which would trigger financial penalties and has already prompted sharp criticisms of the deal by some state legislators.

This is a new market that arose after the Trump administration imposed tariffs on overseas-made panels in 2018, according to Reuters. 

Solar struggles: Tesla has been struggling to get production up and running, and gain ground in a solar space dominated by low-cost panels produced overseas, primarily in China.

Tesla Inc. said on Wednesday its solar factory in Buffalo, N.Y., would become the “manufacturing home” for its electric vehicle Supercharger cabinets and other energy storage products as it seeks to meet employment targets tied to state subsidies linked to the site.

Tesla: N.Y. solar factory to make EV chargers, other products

Last year, Tesla ended its months-old retail partnership with Home Depot, and shuttered a number of solar installation facilities. It's reportedly cut thousands of workers in its solar division since the acquisition. The team also faced difficulties with the appearance and performance of the Solar Roof tiles.

The electric vehicle maker has more than 300 employees elsewhere in the state, it said. The company was required to have at least 500 employees in the state by April 30 as part of its commitment to New York, which provided $750 million in subsidies for the plant.

Tesla starts Supercharger V3 production in Giga 2, exceeds employment goals in NY

A Bloomberg article late last year said Tesla was operating just one production line at the Buffalo factory, rather than the multiple lines that were supposed to be running at that stage.

The piece also noted that Panasonics production is distinct from Tesla, set up on the other side of the building, despite Teslas portrayal of the deal as a close collaboration. While Panasonic has been making Solar Roof cells, Tesla took issue with their aesthetics and cost and had turned to a Chinese supplier as well, Bloomberg reported, citing several sources.

At the time, it planned to use the factory to make a trailblazing product called the Solar Roof, an energy system meant to look like normal roof tiles. But that product has been far slower to reach the market than promised.

Its unclear precisely how many solar cells, roof tiles, or panels Tesla is now producing itself or acquiring from Panasonic. But it's likely a small fraction of the one gigawatt of solar capacity a year that the company initially boasted the factory would produce (see 10 Breakthrough Technologies 2016: SolarCitys Gigafactory).

Teslas plan to manufacture solar products in New York has come under scrutiny as the company has drastically scaled back the U.S. solar business it acquired in 2016 with the $2.6 billion purchase of SolarCity.

James TempleI am the senior editor for energy at MIT Technology Review. Im focused on renewable energy and the use of technology to combat climate change. Previously, I was a senior director at the Verge, deputy managing editor at Recode, and columnist at the San Francisco Chronicle. When Im not writing about energy and climate change, Im often hiking with my dog or shooting video of California landscapes.

Tesla will also open three new vehicle service centers in New York, the company said. A year from now, the company is required to employ 1,460 workers in the state.

ShareLinkAuthorJames TempleI am the senior editor for energy at MIT Technology Review. Im focused on renewable energy and the use of technology to combat climate change. Previously, I was a senior director at the Verge, deputy managing editor at Recode, and columnist at the San Francisco Chronicle. When Im not writing about energy and climate change, Im often hiking with my dog or shooting video of California landscapes.

The company disclosed the move in an annual report to New York state in which it said it had exceeded its jobs and investment commitments thus far.

The Buffalo, New York, factory is finally looking like itll live up to its potential, with several new lines planned in the near future.


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