Tesla and Panasonic Parting Ways on Solar Cells

Panasonic said it will no longer produce solar cells and modules at Tesla's Buffalo, New York factory, signifying the end of a four-year joint venture with the unprecedented electric automaker.

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Panasonic exiting Tesla New York factory

Nikkei Asian Review was first to the story that Panasonic would end its production agreement with Tesla. Since the story broke, Panasonic has issued an announcement to explain its decision to cut ties. Tesla has not responded to requests for comments from other websites.

Panasonic said its manufacturing operations at the Tesla factory will cease as May ends this year. The company will exit the factory by September.

As of writing, Panasonic employs roughly 380 people at the Tesla factory. Severance packages will be given to those employees. Panasonic also said it will work with Tesla to identify and hire replacements as its workforce leaves. Panasonic's announcement also states that it will hire qualified applicants to newly-vacant slots Tesla needs to maintain its solar and energy manufacturing operations.

Panasonic originally teamed up with Tesla in 2016, to jointly produce cells at the "Gigafactory 2" plant in Buffalo, New York. Panasonic was committed to sharing the cost of equipment needed for the plant. The joint venture strengthened the relationship between the two companies, who had already worked together in the production of battery cells at Tesla's Reno, Nevada factory.

Tesla ramps up production of solar cells

Panasonic's exit comes while Tesla scales up its energy business, while it also tries to meet the employment requirement of a state-funded factory. The one at Buffalo was built with $750 million in taxpayer funds and was subsequently leased to Tesla. The company's deal with the state of New York dictates that they must employ 1,460 people there by April, or be served a $41.2 million penalty.

When reports of Panasonic's exit made its rounds, Tesla told Empire State Development, the New York economic development authority that manages the factory, that it has hired beyond its hiring commitment.

"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," said Chairman of Empire State Development Howard Zemsky, in a statement.

Panasonic's move away from global solar products won't affect Tesla's current operations, nor will it affect Tesla's commitment to Buffalo and the State of New York.

Development authority will verify Panasonic's data, said Zemsky, who added that the count doesn't currently include Panasonic positions. According to Zemsky, Panasonic never received incentives from the state, unlike Tesla.

As Panasonic waves goodbye to New York, it will continue to work with Tesla under a separate joint venture to manufacture battery cells in a gigantic Reno, Nevada factory. In a statement, Panasonic said the decision to part ways with the New York factory "will have no impact on Panasonic and Tesla's strong partnership in Nevada."

However, reports of a strained relationship have grown in the past few years. Tesla's Feb. 2019 acquisition of Maxwell Technologies has fueled questions as to whether the automaker would prefer to produce its own battery cells, without Panasonic.