In December 2016, Panasonic and Tesla finalized an agreement to begin manufacturingsolarPV cells and modules at the "Gigafactory 2" in Buffalo, New York.

Under the arrangement, Panasonic agreed to cover the capital costs associated with the factory and Tesla agreed to purchase Panasonic's custom-manufactured solar products.

"These high-efficiency PV cells and modules will be used to produce solar panels in the non-solar roof products," according to Tesla's statement. "When production of the solar roof begins, Tesla will also incorporate Panasonic's cells into the many kinds of solar glass tile roofs that Tesla will be manufacturing."

Production of Tesla's Solar Roof product did not begin for months after the initial announcement. But one year later -- following delays and a brief trial run -- Panasonic reports that cell manufacturing for the solar roof is now officially underway.

“Panasonic is already inside that factory making solar panels. That started in October of last year," said Peter Fannon, vice president of technology policy at Panasonic Corporation of North America, in an interview at CES. "Also, we are just now beginning to manufacture cells.”

The Japanese multinational made an initial $260 million investment in the Buffalo facility, where it makes HIT (heterojunction with intrinsic thin layer) solar cells for Tesla. With the plant now up and running, Panasonic is prepared to invest more.

“We expect that investment, along with Tesla, as it grows, will grow with it," Fannon said.

But it's unclear how much growing is going on. 

Tesla completed the first solar roof installations on the homes of executives and employees in August. Little was heard about the solar roof after that, save for reports of several more installations for employees. The tiles were initially produced at small scale at the former SolarCity pilot production line in Fremont, California.

Last summer, Tesla CTO JB Straubel said solar roof production at Gigafactory 2 would ramp up “in a substantial way” by the end of 2017, and increased the company's goal to achieve 2 gigawatts of solar panel capacity per year. But as the new year arrived, the status of Tesla's solar tile production was still murky.

Tesla confirmed today, however, that solar roof manufacturing began in Buffalo in December. The company also said that it is now starting Solar Roof Textured and Smooth installations for non-employee homeowners.

Fannon said that Panasonic has started to boost its operations to meet growing solar roof demand.

“As I understand it, they’re taking orders, and they have a big backlog already," he said. "We’re growing the cell manufacturing as we speak."

Fannon could not comment on how fast or slow Tesla is making solar roof tiles with those cells, however. “I don’t know," he said. "We’re not in their factory."

“We know that their demand is continuing and we’re growing our manufacturing output to meet their demand,” Fannon added. “That partnership is working nicely in parallel with the one in batteries -- where we're growing together.”

Selling tariff-free solar cells

Panasonic’s cell manufacturing business in Buffalo is one of the few examples of solar cell manufacturing taking place in the U.S. and certainly the most recent cell production facility to launch in the country. That’s interesting in the context of the Section 201 solar trade case.

Panasonic’s two biggest high-efficiency solar panel competitors, SunPower and LG, both manufacture abroad, which means they could be subject to new import tariffs, depending on how President Trump rules on the Section 201 case on January 26. When asked if Panasonic would sell its tariff-free cells to companies other than Tesla, Fannon said: “In the best of all worlds, if we could satisfy everything Tesla wants, yes.”

“We would hope to do that,” he said. “Both for ourselves, to make our own product here in the U.S. -- and for others.”

Fannon acknowledged that the market for high-efficiency solar products in the U.S. is currently small. But he said the company is confident demand will be strong enough to support not only Tesla’s solar roof, but also Panasonic’s panel business.

It's important to note that Gigafactory 2 will not meet all of Tesla's solar cell and module needs. Tesla will continue to import solar products from abroad to meet demand. For that reason the company has joined broader industry efforts to oppose new solar tariffs under the Section 201 case. 

Employment at Gigafactory 2 to double

As production at Gigafactory 2 increases, so will employment. In October, Panasonic employed 182 people at the Buffalo factory. By the end of the year, that number nearly doubled to more than 300. In a few weeks' time, if everything stays on track, “We will be cranking up mass production and nearly doubling that employment number again,” said Fannon.

Panasonic has held several job fairs in New York and has fielded a lot of job applications. The company is now working on setting up training programs for specialist positions handling materials and operating machinery.

Employment numbers are important because they’re tied to funding for the Gigafactory 2. New York state committed $750 million to building and outfitting the 1.2-million-square-foot facility on the condition that the factory create more than 1,460 jobs in the Buffalo area by the time it's fully operational.

According to Tesla, there are roughly 500 employees at the Gigafactory 2 today.

Panasonic has been “very pleased” with its ability to find employees for the solar factory up until this point, said Fannon. But like at the battery Gigafactory in Nevada, “We foresee some difficulty in getting the right talent if it really starts growing fast,” he said. “These aren’t skills that are typically taught in programs for universities.”

Tesla's "production hell" and Panasonic's new Toyota partnership 

Last year at CES, Panasonic and Tesla announced that battery production had officially kicked off at the Gigafactory outside of Reno. But the year was marred by delays, which caused Tesla to miss its production targets for the Model 3. The battery module assembly line was cited as the primary constraint due to the complexity of the module design and the automated manufacturing process.

Last fall, Panasonic executives said they were confident the bottlenecks were nearly worked out. The problem, however, seems to lie more with Tesla, which is in charge of packing Panasonic’s battery cells into modules and the modules into packs. CEO Elon Musk recently camped out on the roof of the Gigafactory while working through production issues.

Tesla still hasn’t escaped “production hell,” it seems. Last week, the company pushed back its Model 3 manufacturing forecast again, and is now targeting to make 5,000 Model 3 vehicles per week by the end of the second quarter of this year.

Panasonic, meanwhile, is expanding its relationship with Japanese auto giant Toyota. In December, the two companies announced a deal to “begin studying the feasibility of a joint automotive prismatic battery business.”

Panasonic already supplies batteries for Toyota’s Prius, “and now we’re teaming up with Toyota to explore the future of EV battery technology,” said Panasonic North America Chairman & CEO Thomas Gebhardt, speaking at CES this week.

“The initial focus of this partnership is on the existing lithium-ion technology,” he said. “But we also intend to explore solid-state battery technology, which could become the next-generation technology for electric vehicles.”

Toyota has invested heavily in hydrogen fuel cell vehicle technology, but is now boosting its efforts in the EV space -- along with every other major automaker. Toyota plans to commercialize solid-state EV batteries by the early 2020s, and is now forecasting a fully electric vehicle lineup by 2025.

Tesla was an early leader on EVs and helped to jump-start the market, and Panasonic became the top battery supplier for the automotive industry through its partnership with the ambitious EV maker. Now, as competitors up their game, Panasonic is intent on holding that position.

This story has been updated to reflect new comments from Tesla. 


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