Global electric vehicle major Tesla has finally ended its partnership to produce solar cells with electronics giant Panasonic. The companies say that they are planning to continue working together on developing and manufacturing automotive batteries for Tesla, but the scrapping of the solar cell partnership is a blow to an already strained relationship, experts note.
Tesla and Panasonic had first announced their huge joint venture on solar cells in 2016 and the Japanese company had borne the costs for part of the equipment need for the ‘Gigafactory 2’ located in Buffalo, Wyoming in the United States.
The facility began producing core components for solar panels in 2017, but both companies have struggled to ramp up production in the factory since then. Under the partnership, the two companies had also agreed to use Panasonic-made solar cells for Tesla’s solar panels. Tesla’s core solar energy offering is the Solar Roof — solar panels intended for home use designed to look like regular black roof tiles.
However, trouble began brewing when Tesla officials held Panasonic-made cells as inadequate since they failed to achieve this look while also maintaining efficiency, costs expected by the EV major. Both companies have been distancing themselves for a while now, with the latest version of Solar Roof launched last year using Chinese-made cells and Panasonic selling the cells it produces at the Gigafactory to Japanese homebuilders.
Since Tesla received local subsidies to build the facility, the company is required to keep the factory’s doors open regardless of the change in plans. However, since both companies agree that solar cell output from the factory is unlikely to increase, they no longer see a need to continue joint production.
Tesla is expected to unveil a new use for the Gigafactory 2 at an investor meeting slated for April. Currently, Tesla’s energy business contributes around $1.53 billion, or just 6 per cent, of its overall revenue in 2019. However, CEO Elon Musk remains enthusiastic about the business and its synergies with electric cars.
With concerns about the companies car manufacturing abating, its investors are turning their focus to improving its renewable energy business.