Tesla Inc. and Panasonic Corp. plan to end their solar partnership at the electric-car maker’s state-subsidized factory in New York.
Panasonic is ceasing its participation in the venture as part of a global overhaul of its solar business, according to a statement. The company will end its manufacturing operations at the factory in Buffalo, N.Y., by May, and exit the facility by the end of September.
The Japanese conglomerate’s withdrawal comes as Tesla again tries to ramp production of its sleek Solar Roof product and nears a deadline to meet certain staffing requirements. The glass roof tiles have yet to capture a significant piece of the market in the years since Chief Executive Elon Musk used the product to justify acquiring debt-ridden SolarCity Corp. in 2016.
“Does it complicate the solar-roof story? Yes,” said Gordon Johnson, an analyst at GLJ Research and a Tesla bear. “Musk has been saying they’re going to ramp the solar-roof business in a big way. He promised 1,000 solar roofs a week by the end of last year, but that did not happen.”
Tesla didn’t address an inquiry seeking comment. Panasonic spoke for its partner in its statement announcing that it would pull out: “According to Tesla, this does not impact Tesla’s future solar growth business plans,” the Osaka-based company said.
As of earlier this month, the Buffalo plant needed to add about 360 more workers to bring its total to 1,460 by April, or pay a $41.2-million penalty.
“Tesla informed us that they have not only met, but exceeded their next hiring commitment in Buffalo,” Howard Zemsky, chairman of the Empire State Development, a New York economic agency, said in a statement. “As of today, Tesla said they have more than 1,500 jobs in Buffalo and more than 300 others across New York state.” He added that the agency would work to verify those numbers.
Tesla has begun rolling out the Solar Roof to customers in California, many of whom are affluent homeowners who already own its electric cars. The company is racing to hire roofers, installers and electricians in more than a dozen U.S. states.
Panasonic and Tesla have had a tumultuous relationship since they unveiled an agreement in 2014 for the Japanese company to make the batteries that power the American company’s electric cars. Last year, Musk publicly blamed Panasonic for constraining production of Model 3 sedans. Just this month, Chinese battery maker Contemporary Amperex Technology Co. won a two-year contract to supply Tesla’s new factory near Shanghai.
In the statement Wednesday, Panasonic said it will continue to produce car batteries with Tesla at a plant in Nevada. That operation was profitable for the first time in the quarter that ended in December.
The Nikkei reported Panasonic’s plans to end the New York partnership earlier. The newspaper said Tesla has been using cells sourced from China for the Solar Roof.
“Making a solar roof is more technically challenging than producing a normal solar panel,” Xiaoting Wang, an analyst at BloombergNEF, said in an email. Roofs are “supposed to play two roles and should meet more strict standards, such as higher mechanical strength.”