Tesla and Panasonic’s solar marriage in Buffalo has ended.
Nikkei Asian Review first reported Tuesday that Tesla and Panasonic will end its joint solar cell production at the Buffalo plant and cease U.S. solar operations by May.
At least 400 workers in Buffalo will be laid off with severance, but some may be able to get jobs at Tesla.
“Panasonic is supporting Tesla in its efforts to identify and hire qualified applicants from Panasonic’s impacted workforce,” Panasonic said in a prepared statement.
Shortly after that report, Empire State Development, the state’s economic development agency, added that the break-up will not impact Tesla’s operations.
At least $959 million of state taxpayer money went to build and equip much of the factory, the crown jewel of Gov. Andrew Cuomo’s Buffalo Billion economic development initiative.
Factory production has been slow, largely due to the slow progression of Tesla’s Solar Glass Roof, which are solar panels that resemble traditional roof shingles.
At the same time, Empire State Development Chairman Howard Zemsky announced that Tesla has already exceeded its hiring commitment of 1,460 employees due in April.
Missing that employment goal would result in a $41.2 million penalty against Tesla.
Tesla reported to the state that it has more than 1,500 employees at the Buffalo factory, not counting Panasonic workers.
The agreement between Tesla and the state requires Tesla to retain those jobs for a period of five years.
“ESD will perform the necessary due diligence to verify the company’s data,” Zemsky said.
Buffalo Mayor Byron Brown said Panasonic officials briefed him Wednesday.
“While I’m disappointed by the Panasonic news, I am encouraged by the news from Tesla that they have now hired more than 1,500 employees,” Brown said.
Tesla announced its partnership with Panasonic on Dec. 27, 2016, and it came as a breath of fresh air.
Controversy engulfed the project a month earlier when a federal grand jury indicted one of Cuomo’s former aides, the former president of SUNY Polytechnic Institute, and members of LPCiminelli, who built the factory, on bid-rigging charges. They were all convicted in December 2018.
Tesla announced in 2016 that it planned to incorporate Panasonic’s cells into its Solar Glass Roof tiles.
But the Nikkei Asian Review reported that Panasonic failed to meet the specs Tesla desired for its Solar Glass Roof tiles.
Tesla is now using Chinese cells, the Review reported, which might explain why some Solar Roof customers have received shipments from China instead of Buffalo.
A sign that the partnership was on shaky ground came in January, when Panasonic sent a letter to its business partners to warn them that none of the Tesla/SolarCity solar modules would be covered under any warranty by Panasonic.
“It has come to our attention that Tesla has recently sold a large quantity of solar panels, once earmarked for SolarCity, into the marketplace through a third-party vendor,” the letter stated.
Meanwhile, Tesla has renewed focus on the Solar Glass Roof.
In October 2019, Tesla CEO Elon Musk held a conference call with investors to talk about the third iteration of the Solar Glass Roof.
Musk has said several times that he wanted to make 1,000 a week by the end of 2019, but he missed that goal.
Musk admitted that the Buffalo plant got neglected while Tesla focused its energy on its electric vehicle fleet, chiefly the Model 3.
As a result, this past year was rough for Tesla’s solar energy business, despite a strong finish to the fourth quarter.
In January 2019, Tesla laid off 9 percent of its global workforce, including more than 50 employees in Buffalo.
Tesla’s annual energy revenues declined by almost $25 million last year. In fact, Tesla’s solar energy and storage side of the business accounted for just 6.2% of its revenue last year.
Job target reached?
Assemblyman Sean Ryan and Mayor Brown toured the Tesla plant in Buffalo about two weeks ago.
Ryan said Tesla managers told him they had 1,100 employees, counting Panasonic workers.
Two weeks later, Tesla informed state officials that it has exceeded the state goal of 1,460 workers, without counting Panasonic employees.
News 4 Investigates has learned that Tesla used at least one temporary worker agency for employees.
Neither Tesla nor ESD provided any data to support the job numbers and did not answer any additional questions.
Originally, the Cuomo administration struck a deal with Silevo to build and equip a new facility in Buffalo.
Silevo was to make a new solar cell technology that cost less and captured more energy than competitors’ products.
In 2014, SolarCity bought Silevo. That led the Cuomo administration on a series of 10 amendments of the original contract, quietly reducing job targets, removing the requirement for “high-tech” jobs that would have likely brought higher wages, and provided an exit strategy for the company if changes to local, state or federal regulations or policies adversely affected the business.
By 2016, Tesla had purchased SolarCity for $2.6 billion, upsetting some investors who filed a lawsuit charging that Musk bailed out his cousins’ company, which put a strain on its finances.
State’s ‘due diligence’
ESD said Tuesday that it will do its due diligence in reviewing Tesla’s job numbers.
Tesla will be required to complete some reporting forms, ESD said, along with requests for corporate attestations.
Once that information is in hand, ESD and Fort Schuyler Management Corporation, a nonprofit arm of SUNY Poly, can conduct the following work to verify Tesla’s employment numbers:
- Conduct on-site audits,
- Request documents such as a human resources list of employees and, to the extent possible, verifying the presence of such employees on site.
- Put into effect a memorandum of understanding with the NYS Department of Labor to obtain actual employment data from the unemployment insurance program. ESD can then use this data to cross-check Tesla’s reported figures.
Assemblyman Ryan said a lot has changed at the plant since his last tour two years ago.
“The area that I had seen previously where you could have held an indoor soccer game comfortably was filled with lines of production, machines, robotics, operators running the machines,” Ryan said.
“So, I was surprised, but I was happy because we’ve been skeptical of Tesla, but we want them to succeed we need them to succeed, we need to not only justify New York State’s gamble with them, but we want this element of our economy to grow.”
Musk already announced that he plans to open the doors to the media and public in April, after some prodding by local and state officials.
“A lot of people are rooting for their success, so I’m not quite sure why they try to hide what they have going on,” Ryan said.