Panasonic confirmed Wednesday it will exit Tesla’s Gigafactory in Buffalo, New York, where it worked with the automaker to produce solar cells and modules.
Panasonic will cease its operations in New York and completely leave the facility by September as part of a “broader streamlining of its global solar operations,” the Japanese electronics giant said in a statement. Aside from its manufacturing in the U.S., Panasonic maintains cell production in Japan. The company said it will continue to sell its panels into the U.S. market.
The New York Gigafactory, where the two companies manufacture materials for Tesla’s high-end solar roof and some storage products, has been at the center of questions about Tesla’s commitment to its solar business, which it acquired from SolarCity in 2016. Until recently, that business appeared to be on the decline, but Tesla increased its rooftop solar installations in the last two quarters.
The latest shakeup comes soon after Tesla introduced its third version of the solar roof, a product that has yet to reach significant manufacturing volume or wide-scale deployment. Tesla did not respond to requests for comment on the dissolution of the solar partnership.
The two companies will continue working together at the Gigafactory in Nevada, where they produce batteries and Tesla energy storage products. Though tensions between Tesla and Panasonic have been well documented, Panasonic said the solar decision has no bearing on that “strong partnership in Nevada.”
A blow for U.S. solar manufacturing?
The impacts of the partnership’s ending will be felt beyond Buffalo. The U.S. International Trade Commission recently delivered its midterm review of Section 201 solar tariffs to President Trump. The review concluded that, although U.S. 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.
To support the 3 gigawatts of additional module manufacturing the U.S. has added, an industry coalition is calling for a higher quota on imported cells. If Panasonic’s exit means the end of cell production in New York — a likely outcome, as cell production is difficult to ramp and Tesla does not produce cells — the U.S. would be left with no source of cells, which could strengthen those arguments.
A Panasonic spokesperson told GTM that the company plans to “evaluate and make further decisions on how the Panasonic equipment will be used, disposed or repurposed” as May approaches, but did not directly comment on the future of cell manufacturing at the plant.
In New York, Panasonic said, Tesla “hopes to hire as many qualified Panasonic applicants as possible to help fill job openings for its growing operations in Buffalo.”
A deal with New York state requires Tesla to meet a citywide employment target of 1,460 workers in Buffalo by 2020. The company has already reported 1,500 jobs in Buffalo and an additional 300 across the state, Empire State Development, the state’s economic development agency, said on Tuesday.
Panasonic and Tesla are planning two job fairs to help affected employees who don’t transition to Tesla.
This story has been updated with comment from additional comment from Panasonic.