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Tesla’s solar plant woes proving problematic for Panasonic

Reuters SAN FRANCISCO/LOS ANGELES (Reuters) — Tesla Inc.’s production of solar roof tiles has been delayed by assembly-line problems at its new publicly subsidized factory, and difficulties producing a product that satisfies the aesthetic demands of CEO Elon Musk, eight former and current employees of both companies told Reuters.

Repeated hold-ups since the Buffalo, N.Y., plant opened last year have forced Tesla’s partner in the joint venture, Panasonic, to seek other buyers for the components it had built to sell to Tesla, according to a Panasonic employee, a former Panasonic employee and a former Tesla employee.

The issues have also rattled the faith of state officials in Tesla’s ability to deliver on investment and employment promises it made in exchange for $750 million in state subsidies.

The production challenges add to doubts over Tesla’s cash-strapped solar operations as it focuses on boosting production of its better-known electric vehicles, which have also seen repeated production delays. Tesla acquired the solar business in 2016 in a controversial $2.6 billion purchase of SolarCity — a sales and installation company founded by two of Musk’s cousins — but the business has been shrinking ever since.

The “Solar Roof” produced at the New York factory is designed to look like a normal roof while generating electricity, a combination that has proved challenging.

“Aesthetic look is the key point that Elon is always not satisfied with,” said another former Tesla employee, who works in Fremont, Calif.. “That’s the big issue.”

In a call with Tesla investors last week, Musk said “hundreds” of homes already had solar roofs, but the company clarified the estimate in its statement to Reuters, saying it included systems that had been partially installed or were “being scheduled for install.”

In California, the nation’s leading solar market, there were twelve Tesla roof systems connected to the grid as of May 31, all in Northern California, according to records from the state’s three investor-owned utilities. The cost per watt for those systems was listed at nearly $6, according to the records. That’s about double the national average for solar systems.

Tesla began accepting $1,000 deposits from customers for the Solar Roofs in May 2017, seven months after it unveiled a prototype.

The company did not detail its current production and did not comment on its component purchases from partner Panasonic, which shares space in the factory and plans to produce Tesla solar panels and photovoltaic cells for the roofs.

Panasonic has been selling some of the solar panels it produces in Buffalo under its own brand instead of selling them to Tesla, Panasonic said in a statement.

It has also been shipping a large volume of the photovoltaic cells it produces in Buffalo as samples to prospective buyers because of low demand from Tesla, according to the Panasonic employee and a former Tesla employee.

Panasonic declined to comment on the shipments of cell samples to other customers, but said in a statement that it has not yet completed sales to buyers other than Tesla or signed alternate supply deals.

“We believe Tesla will use Panasonic cells when it mass-markets the Solar Roof,” the company said in a statement.

Panasonic recently produced about 1,900 conventional 325-watt solar panels per day at the plant, meant to be sold under the Tesla brand, and about 2,000 5.5-watt photovoltaic cells per day that were intended for the solar roof, according to two Panasonic sources, one who recently left the company.

That would put annualized production at about a quarter of Tesla’s target for the plant, which is 1 gigawatt per year by 2019. And Tesla isn’t buying most of the cells being produced, according to the Panasonic employee.

“We have been entertaining outside customers,” the employee said.Speech

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