Tesla Motors is partnering with Panasonic to produce solar panels at a taxpayer-funded New York facility that is currently facing corruption charges.
The California-based automaker said the two companies will use a facility in Buffalo, NY to sell electric batteries, as well as Panasonic’s panels, according to a blog post on Tesla’s website. SolarCity will sell, finance and install the panels.
“We are excited to expand our partnership with Panasonic as we move toward a combined Tesla and SolarCity,” Tesla Chief Technical Officer J.B. Straubel wrote Monday.
The factory is part of a taxpayer-funded project that is the subject of federal corruption charges.
Investigators believe the so-called Buffalo Billion disproportionately benefits well-healed developers who frequently donate to New York Democratic Gov. Andrew Cuomo, as well as companies known for feasting on Buffalo tax dollars in the past. SolarCity hasn’t been named in the probe.
The plant is expected to start producing solar panels, among other products, by the end of June, according to Empire State Development, the state agency overseeing the multi-billion dollar project.
Cuomo praised Tesla’s plans Monday, telling reporters that the collaboration will bring jobs and prosperity back to a beleaguered Buffalo area.
“Tesla’s partnership with Panasonic will bring world-class manufacturing expertise to the table, strengthen the company’s competitiveness and position the entire region for future economic revitalization,” he said.
The move to combine efforts is entirely dependent on the approval of the Tesla-SolarCity merger. The $2 billion deal will be brought to a vote Nov. 17. Tesla and SolarCity’s financial situation is nearing complete collapse.
The Panasonic-Tesla deal, for instance, could very well be a means of propping up SolarCity, which is more than $3 billion in debt and hasn’t turned a profit since 2012. It spent $438 million this year, nearly 50 percent more than its revenue of $308 million.
Elon Musk, who chairs both companies, bought $65 million of SolarCity’s bonds in September, while his cousins — Lyndon Rive, the company’s CEO, and Chief Technology Officer Peter Rive (Lyndon’s brother) — each purchased $17.5 million, the company said on Aug. 24 in a financial filing.
The downturn has cost Musk dearly. The techno-entrepreneur’s wealth has tumbled by $779 million, according to the Bloomberg Billionaires Index, due in part to drops in Tesla Motors and SolarCity stock prices, and Wednesday’s filing showing he has ponied up $489 million of his Tesla and SolarCity fusion.
Solar panel prices are in free fall, dropping about 15 percent this year, said Paula Mints, chief analyst at SPV Market Research in San Jose, Calif. Prices are even worse in China, where panels are selling for as low as 40 cents a watt, she added.
“As we go down this long road to unprofitability, entering this market is insane,” Mints said.
Panasonic’s move, meanwhile, shows the tech company is continuing to snuggle closer and closer to Tesla’s business model. The company is forking over $1.6 billion to the cost of the electric vehicle maker’s Nevada gigafactory.
The chaos has prompted analysts to start striking bearish stances on Musk’s entities.
Ross Gerber, chief executive officer of Gerber Kawasaki Wealth & Investment Management, for one is souring on Tesla’s fortunes even as his company holds a $5 million position in Tesla and has recently been selling shares.
“He’s got guts, I’ll give him that,” Gerber told reporters, adding: “He really pushes it out on his companies, but Elon could implode.”
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