Panasonic to quit production of solar cells at Tesla’s New York plant

Panasonic’s partnership with Tesla Inc. as an exclusive supplier of batteries for the U.S electric car manufacturer takes another step closer to its end with Panasonic announcing on Wednesday that it wishes to quit solar cell production at Tesla’s NY plant. The announcement fueled uncertainty regarding the future of Tesla’s solar business that has recently been under excessive scrutiny.

In its address to New York, Tesla highlighted that Panasonic’s departure doesn’t toll on the company’s operations. Tesla reiterated that it has created 1,500 jobs so far that fulfills its commitment of 1,460 employees before April. Failure to meet the target could see a $41 million penalty on Tesla.

Panasonic Is Struggling To Divest Its Unprofitable Businesses

Panasonic’s departure stemmed from its struggles to divest its unprofitable businesses. The company’s switch from consumer electronics to components has so far failed to drive significant profit.

Tesla’s business relations with Panasonic were previously strained when the U.S electric car manufacturer expressed plans of expanding its partnerships with other battery suppliers like Contemporary Amperex Technology Ltd (China) and LG Chem Ltd (South Korea).

Panasonic’s, however, will continue to produce automotive batteries for Tesla in Nevada. Following multiple complications and delays in production, Panasonic recently posted a quarterly profit for the first time in years in Nevada.

Panasonic refused to give an official statement regarding the recent news and Tesla could not be approached for comment.

Tesla And Panasonic’s Performance In The Stock Market

The lower demand for solar cells from Tesla pushed Panasonic to export the majority of its production in New York to its overseas clients. At the time of announcing its partnership with Tesla for the solar business in 2016, Panasonic had pledged to invest $271.96 million in the NY plant. A long-term commitment from Tesla to purchase the solar cells was the other side of the deal.

Owing to massive competition from cheaper rivals in Asia, Panasonic recently chose to shrink its solar business with its solar panel and research arm in Malaysia being sold to China’s GS-Solar in 2019. The price of the aforementioned deal, however, wasn’t divulged.

At the time of writing, Panasonic is trading at 1,127 JPY in the stock market that marks an over 10% growth in 2020 so far. Tesla, on the other hand, is exchanging hands at around $791 per share that translates to a massive 85% growth in the stock market this year.