Panasonic will no longer be building solar cells at Tesla’s New York Gigafactory 2 plant, the company said in a press release. That is to say Panasonic won’t be working on Telsa’s latest Solar Roof tiles as intended, though it won’t affect their Tesla EV battery partnership deal.
Still, it’s not a great sign for the two companies, especially considering that Tesla might start building its own EV batteries.
Panasonic said that the decision stems from a “broader streamlining of its global solar operations,” and won’t impact Tesla’s future solar growth business plans. It added that “Tesla plans to hire qualified applicants to new positions needed to support its solar and energy manufacturing operations in Buffalo.”
Tesla received state support from New York for the Gigafactory project in the form of grants totaling around $750 million. In return, it’s required to spend $5 billion in the state over a decade and employ 1,460 workers in Buffalo.
Failure to do so would result in a $41 million fine against the company. However, Tesla told New York that the Panasonic split “has no bearing on Tesla’s current operations,” according to a statement it gave to Reuters.
While Tesla’s EV division is doing well after a “production hell” period, the company has struggled with its solar power company. Employees recently reported production line problems with the cells and tensions with Panasonic, causing delays to both regular solar panels and Tesla’s Solar Roof.
Elon Musk’s exacting standards for the design of the Solar Roof tiles has also caused friction between the companies, according to an earlier Reuters report.
For its latest Solar Roof (designed to generate electricity while looking like a regular slate roof), Tesla has been using Chinese-built solar cells rather than Panasonic’s cells.
Panasonic, meanwhile, has reportedly been selling its photovoltaic cells, originally intended for Tesla, to other third-party companies in Japan and elsewhere.
Panasonic will continue to market solar cells under its own brand name, while helping Tesla recruit current and new employees. It also tried to water down any concerns about the EV battery partnership.
“This decision will have no impact on Panasonic and Tesla’s strong partnership in Nevada,” Panasonic said in the press release. “The two companies will continue their industry-leading electric vehicle battery work taking place at Tesla’s Gigafactory outside of Reno, Nevada.”