Tesla, Inc. (NASDAQ: TSLA) is finally shipping both solar panels and Solar Roof tiles from Gigafactory 2, the manufacturing plant it is building with Panasonic in Buffalo, New York. We don't know yet how many, but it's progress that something is coming out of the plant after months of delays.
The goal is for Gigafactory 2 to produce at least 1 GW of high-efficiency solar cells and modules annually (and potentially as much as 2 GW), as well as its Solar Roof tiles. But it's taking somewhat longer than Telsa originally forecast to turn those production plans into reality.
Reporting from PV Magazine and Greentech Media indicates that Panasonic began producing solar panels at Gigafactory 2 in October, and Solar Roof production began in December. Tesla also said that Solar Roof tiles are now being shipped to customers who aren't Tesla employees, essentially their debut in the commercial market.
Panasonic (NASDAQOTH: PCRFY) is ultimately in control of most of the solar cell and module manufacturing, and may have different plans for its solar business than Tesla. While Panasonic clearly sees U.S. manufacturing as a key way to grow its solar module business -- and one that may become even more important if Trump introduces tariffs on imported solar panels this month -- Tesla has been shrinking its solar business.
The situation could be interesting if Panasonic finds itself with a tariff-related windfall in 2018, but Tesla doesn't have the capacity to take all of those solar panels and install them on homes itself. Panasonic doubtless would be more than happy to sell panels to other installers if they were the ones willing to pay the highest price.
Solar Roof is here... sort of
For all the hype around the Solar Roof when it was announced in fall 2016, there hasn't been a lot of talk about it from Tesla over the past year. Production has come online much more slowly than the company expected, and we still don't have many details about performance and installation. We also have no idea how many Solar Roofs have been ordered so far.
With those caveats laid out, it's important for Tesla to get the Gigafactory 2 up to full production because it'll augment the EV and energy storage business, creating a full suite of products for customers to consider. Whether or not people will want to buy a Solar Roof along with their Model 3 is up for debate, but Tesla is in a unique position to offer complementary energy services.
Now comes the hard part
As we've seen with the Model 3, the first month of production won't be the hard part for Gigafactory 2. Tesla and Panasonic now have to produce solar cells, modules, and the Solar Roof to world-class standards at world-class costs. It's not clear either company can do that, given the fact that Tesla is constantly late and over budget in auto manufacturing, and that Panasonic has already been forced to shut down some of its solar manufacturing because it wasn't competitive in the market.
At least the initial production milestone has been crossed off for Tesla at Gigafactory 2. The rest of this year will be about ramping up output and selling more solar products, something the company didn't seem terribly interested in during 2017.
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