The "great majority" of solar cells being produced at Tesla’s factory in West New York aren't being used in the company's "Solar Roof", as was pitched to win hundreds of millions in subsidies. Rather, they're being exported and sold overseas to "a large Asian buyer", according to a new report from Reuters.
This unexpected shift in strategy, comes after New York state granted Tesla $350 million to build its factory, along with $274.7 million for equipment and $125.3 million “for additional specified scope costs,” according to Tesla disclosures. The subsidy requires that Tesla employ 1,460 people in Buffalo and spends $5 billion in the state over a decade. The factory employs only about 800 workers now.
While the plan was to mass produce cells for the "Solar Roof", Tesla has only "sporadically" purchased solar cells produced by its partner in the factory, Panasonic.
Furthermore, a Panasonic letter to U.S. Customs said that the rest of the cells are going "largely to foreign buyers". The letter to customs was dated last October and was sent with a "request to produce the cells in a foreign trade zone within the Buffalo plant that would allow Panasonic to import certain parts tariff-free because the finished cells would be sold overseas, not domestically."
It's a far cry from how the partnership was originally pitched:
When the two firms announced the partnership in 2016, the companies said they would collaborate on cell and module production and Tesla would make a long-term commitment to buy the cells from Panasonic. Cells are components that convert the sun’s light into electricity; they are combined to make solar panels.
Tesla planned to use them in its Solar Roof, a system meant to look like normal roof tiles. Tesla Chief Executive Elon Musk billed the product as a cornerstone of the strategy behind the acquisition - selling a low-carbon lifestyle to eco-conscious consumers who could use the power from their Solar Roof to charge their Tesla electric vehicle.
But the company has installed them on just a handful of rooftops nationwide so far after production line troubles and a gutting of Tesla’s solar sales team.
“We believe Tesla will use Panasonic cells when it mass-markets the Solar Roof,” the company had previously said. It shares floor space in the Buffalo plant with Panasonic. The relationship between the two companies has soured in recent months.
California data shows that only 21 solar roof systems were connected by the state's three investor-owned utilities as of February 28. Only a "few others" are connected elsewhere in the U.S., according to a former Tesla employee. Tesla, not surprisingly, decided not to comment, despite the fact that Musk once called the acquisition of Solar City a "no brainer".
Panasonic spokesman Alberto Canal confirmed that Panasonic was seeking to use Buffalo to fulfill demand for U.S.-made solar cells from foreign buyers, but he didn't comment about the company's sales to Tesla. We wonder why.
Reuters had previously reported that Panasonic was selling traditional solar panels produced at the plant to other buyers due to "lower demand" from Tesla. In Q1, Tesla reported a 36% slide in overall solar sales. Since the purchase of SolarCity, installations have dropped more than 76%.
And despite the volatility, clueless New York lawmakers responsible for giving Tesla the subsidies still couldn't be more pleased.
Pamm Lent, spokeswoman for Empire State Development, said: “We have two of the leading clean energy companies in the world in Buffalo at the RiverBend facility. Tesla produces their innovative solar roof tiles largely for development and testing with the goal of full scale launch in the future. Panasonic is now the largest producer and employer at Riverbend with a customer base independent of Tesla.”
Little does she know, Tesla doesn't even seem to be part of the equation at the factory. One employee told Reuters: "Everybody wants Tesla to succeed, but we are operating completely independently from them right now.”