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Tesla, Panasonic To Partner On Solar Manufacturing
Tesla Motors is partnering with Panasonic Corp. to begin manufacturing solar panels in Buffalo, NY at a plant meant for SolarCity Corp. Considering Tesla has yet to take over SolarCity, is Elon Musk getting ahead of himself? Is Tesla biting off more than the company can chew?
Tesla Partners With Panasonic To Begin Solar Manufacturing
Tesla and Panasonic, already partners in the former's Gigafactory battery plant outside Reno, are teaming up again. This time, the car and battery maker is working with Panasonic to manufacture solar panels at a manufacturing plant it doesn’t even own. The agreement is tentative. Since the plant belongs to SolarCity, the agreement depends on Tesla’s acquisition of SolarCity, which isn’t decided until November, to move forward.
The partnership makes sense. Tesla is working to build a renewable energy brand, and a big part of that is solar power. SolarCity claimed last year to manufacture a new kind of solar panel at this factory which would be more efficient than anything else at converting sunlight into power. Panasonic proposes to make a roof which generates solar power at the Buffalo factory, with Tesla as the main customer.
SolarCity is currently the largest installer of solar panels in the US but doesn’t actually manufacture the panels. Panasonic, however, is an expert at manufacturing. Panasonic will make the panels and Tesla will, in turn, put into place a long-term commitment to buy the cells from Panasonic as part of Tesla’s vision for a self-sustaining home.
While the partnership makes sense, the timing is off.
Wholesale panel prices have dropped by about 15% this year, with China’s prices far below that. And while moving manufacturing in-house under Panasonic cuts prices, whether or not Tesla can compete with international prices remains to be seen. On top of that, Tesla taking over SolarCity doesn’t give Musk any additional resources. In fact, SolarCity hasn’t made a profit since going public in 2012, which is why Musk is simply taking the company for all stock and transferring over $3 billion in debt.
Shareholders of both Tesla (TSLA) and SolarCity (SCTY) seem hesitant to embrace Musk’s vision. Shares of Tesla are down 1.3 percent, and SolarCity shares have dropped 1.75%. At a time when existing panel makers are struggling due to a global surplus, another manufacturer entering the fray to lower prices, even more, doesn’t seem like the best use of resources for Musk.
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