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Panasonic To Divest Its Partnership With Tesla For US Solar Plant In Buffalo


02/26/2020


Panasonic To Divest Its Partnership With Tesla For US Solar Plant In Buffalo
The strategic partnership that the Japanese firm Panasonic had struck with the United States based electric car maker Tesla as the sole and exclusive supplier of car batteries to for the Tesla cars is nearing its end and this was evident in the decision of the Japanese firm to exit solar cell production at the car makers’ New York plant.
 
The solar business that Tesla had acquired for US$2.6 billion in 2016 has been under close scrutiny by investors and the industry as the company had drastically scaled back its operations and this latest move by Panasonic further increases the uncertainty over the venture.
 
The state of New York has been informed by Tesla that Panasonic’s withdrawal “has no bearing on Tesla’s current operations”, the state said in a statement.
 
The state said currently there are 1,500 employees of the company in the city of Buffalo which is more than the commitment of 1,460 that was made before April which helped it to avoid a $41 million penalty.
 
This latest decision of Panasonic is a part of its efforts to divest its unprofitable businesses – which in turn, is a part of the larger revival strategy of the company to shift from consumer electronics to components, but a strategy that has not been able to bring in profit and growth for the company as yet.
 
Analysts view this plan of Panasonic as a reflection of its deteriorating relationship with the US electric vehicle maker which has said that it would include more vendors for supplying batteries for its cars and includes names such as South Korea’s LG Chem and China’s Contemporary Amperex Technology Limited.
 
According to reports however, the automotive battery joint venture between Panasonic and Tesla will continue to operate in the US state of Nevada. The company has recently reported a quarterly profit for the first time after years of grappling with production problems and delays.
 
There were no comments available from Panasonic and Tesla.
 
One of the major issues being faced by Panasonic in the solar business is a very low demand for the products from Tesla which has forced the Japanese company to sell most of the manufactured solar cells to foreign clients in place of selling them to Tesla for the trademark Solar Roof of Tesla – ones that are designed look like regular roof tiles, as was the initial agreement between the companies.
 
An investment of over Ұ30 billion or $271.96 million in the Buffalo plant was announced by Panasonic when it has also announced the solar partnership in 2016. One of the major components of the partnership was a commitment by Tesla fo long term purchasing of the products from the Buffalo factory.
 
Competition from cheaper Asian rivals has forced Panasonic to already scale down its own solar business in other parts of the world. The company has been forced to sell out its solar panel plant in Malaysia as well as the research arm there to China’s GS-Solar last year.
 
(Source:www.scmp.com)


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