Tesla's solar factory is exporting most of its cells

https://www.reuters.com/article/us-tesla-solar-exclusive/exclusive-teslas-solar-factory-is-exporting-most-of-its-cells-document-idUSKCN1SL1H5

by SolaceQuantum • 7 years ago

157 132 7 years ago

reuters.com

inflatableDodo• 7 years ago

...accompanied a request to produce the cells in a foreign trade zone within the Buffalo plant that would allow Panasonic to import certain parts tariff-free because the finished cells would be sold overseas, not domestically. That request was granted in April.
The zones help companies avoid, delay or pay reduced tariffs on imported parts in cases where it helps U.S. manufacturers compete with overseas rivals.
“It is fully anticipated that the majority of the cells to be produced” in the FTZ “will be exported,” the company said in its application.
Panasonic’s Canal said foreign solar panel manufacturers want the Buffalo plant’s cells because solar panels assembled abroad with American-made cells can be shipped to the United States tariff-free, according to U.S. trade rules implemented last fall.
Panasonic’s Buffalo operation is one of few U.S.-based solar cell producers because it is traditionally far cheaper to make the components in other countries, putting it in a unique position to serve the foreign demand.

This is kinda hilarious. Gotta love incentives.

Klathmon• 7 years ago

Wait, so if i'm reading this right the process is:

* parts can be imported tariff free into the US to be used to manufacturer cells

* cells get exported back out to other countries (to enable the tariff free importing of the parts).

* cells are then assembled into a final product over seas

* the final product is imported tariff-free due to being manufactured in the US.

Is that correct? Because if so that's hilarious and horrifying at the same time!

zaroth15• 7 years ago

Seems like this is the tariffs doing exactly what they're supposed to do -- incentivize US domestic production.

Panasonic’s Canal said foreign solar panel manufacturers want the Buffalo plant’s cells because solar panels assembled abroad with American-made cells can be shipped to the United States tariff-free, according to U.S. trade rules implemented last fall.
Panasonic’s Buffalo operation is one of few U.S.-based solar cell producers because it is traditionally far cheaper to make the components in other countries, putting it in a unique position to serve the foreign demand.

They would have to do the assembly into panels domestically as well if they didn't have the exemption due to the cells being US built.

fjsolwmv3• 7 years ago

Yes. Manufacture is a multi stage operation. Transportation costs (waste) is balanced against production cost at each stage. Tariffs are one (synthetic) aspect of production costs. This may be a hint that the tariff structure is inconsistent, or perhaps it working fine and transportation waste is an acceptable cost.

One way to look at is that it's often cheaper to export inputs (cells) for foreign assemble and then reimport the outputs, even if tariffs are not a factor in the location of the inputs. I believe steel or aluminum or oil is similar in that taw materials are mined/extracted somewhere, sent elsewhere for processing, and then finished products sent back. You yourself might have once sent a piece of equipment or repair via mail order, or sent your children away temporarily for education?

hef198988• 7 years ago

I knew about customs free zones for storage and logistics. That you can do that with manufacturing is news!

hef198988• 7 years ago

Pretty creative way to subsidize "domestic" manufacturing for sure.

dalbasal2• 7 years ago

So... If they imported the same parts and sold locally without first exporting for assembly.. they'd pay tarrifs on the parts?

This is funny. Also a reminder that while any given engineering-with-tax policy might make sense, the totality adds up to a mess.

username4442• 7 years ago

The issue here is that goods produced or imported into a FTZ should not qualify as American made or origin.

The foreign company should not be able to claim a tax exemption on re-importing to the u.s.

The simple solution is to have the manufactured/imported goods in a FTZ not qualify as American made. Because they're not, if they haven't been subject to all America's rules and regulations

pbreit• 7 years ago

This article is trying too hard to paint a negative picture. The Solar Roof was never suggested as a cornerstone of Tesla's near-term solar activity.

If the Buffalo factory can produce more than Tesla needs I don't see what the problem is selling to others, in the US or out.

pault• 7 years ago

I actually thought the solar rooftop was really cool when it launched, and if I owned a home I would consider buying it. What happened? It sounds like Tesla intentionally sabotaged it.

rory0968• 7 years ago

There's no indication that it's dead, it just launched prematurely (or early to create hype, charitably) before it was ready to scale. Powerwall 1 was similar.

dabeeeenster• 7 years ago

Powerwall 1 was an actual product that you could buy (even internationally) and worked?!

strainer• 7 years ago

Sounds like they are trying to keep their investment alive until there is the policy of strong promotion of renewable energy which half the planet has been crying out for, for years already.

gumby• 7 years ago

The answer is more prosaic. Many people have worked on such technologies (the jargon is “BIPV” — building integrated photovoltaic for decades. The problems have included heat, safety, connections, individual cell failure, fire accessibility... heat in particular is bad (most panels have the back exposed for convection and radiation. Unsurprisingly, Tesla’s announcement in thisnspace claimed revolutionary achievement without mentioning how they planned to address the issues that had caused problems in the past.

knd7752• 7 years ago

Elon Musk mentioned at the autonomy event that the latest version of the solar roof is currently on his house and works great. Seems like they are still working on it, but I had assumed it to be dead until he said that.

fjsolwmv3• 7 years ago

Is there a plausible universe where he wouldn't say that?

zaroth15• 7 years ago

They warranty the glass of the solar roof tiles "forever" (weatherization and energy generation for 30 years). They are only going to install a limited number of test cases until they know exactly what percentage of them will last that long.

The launch price -- $42/sq ft for the solar tiles, $11/sq ft for inert tiles that look the same -- is too high, and manufacturing yield is too low.

Finally, the first few roofs they installed took a Tesla team 3-4 weeks. I've read a couple cases in 2019 that took 2 weeks. I think they need to get installation time down to a week before they want to scale that any further.

In short, they probably lost money on every solar roof they installed in 2018, because that house is essentially acting as a real-world test bench. I think they will only install as many roofs as they need for testing purposes as they refine the design, manufacturing, and installation procedure.

If and when they cross the 20% margin point at a price that's still a premium over a new roof + panels, but not eye-wateringly so, they will scale production and start actually working through their order book.

gameswithgo• 7 years ago

solar rooftop is much more expensive than normal solar panels, and not more efficient. just nicer looking. a hard sell!

nabla93• 7 years ago

It seems to have been just one of those hype cons that Musk is so good at. Musk pitched it in order to rescue the investment made by SpaceX into Solar City.

Every time some approach fails economically/financially, Musk comes up new technology that needs some financing and sells it. He is cashing in his reputation as technical genius again and again. He hopes that that nobody notices how his ideas to turn profit constantly change and are just out of reach.

Tesla was supposed to make 20,000 Model 3 cars by December 2017. If that plan would have worked, Tesla would have needed those cells.

Large scale ramp-up of Model 3 has slowed down to crawl, and has not reached even 6000 cars per month. With those volumes debt will drown Tesla and something must be done. Musk gained new investors with full-autonomy and taxi service idea. Completely insane proposition considering the state-of-the-art and the fact that the regulation is something that the company can't really influence.

hef198988• 7 years ago

SpaceX invested in SolarCity? Didn't know that... And I found the white knight buy out of SolarCity by Tesla already sketchy compliance wise considering the shareholder structure.

leesec2• 7 years ago

Large scale ramp-up of Model 3 has slowed down to crawl, and has not reached even 6000 cars per month.

Well this is a lie lol. They are doing at least 5k cars a week.

thinkcontext• 7 years ago

Its a $50K+ product, so its only really an option for someone who would be willing to shell out for a slate or other high end roof. So, a small market. On top of that high end roofs last a long time (100 years) compared to asphalt shingles, so not many retrofit jobs are likely. New high end homes would be an option, but they would need building partners that would offer it in their menu of options. Doesn't sound like they have one.

Its really a headscratcher as to how they thought this would work out.

RivieraKid• 7 years ago

Solar Roof and to a lesser extent solar panels is a stupidly inefficient way to generate electricity compared to a PV powerplant.

rb808• 7 years ago

Its a great product, I'd think every home would benefit. But I'd like to know a lot more about how safe it is, especially when they get damaged and/or in a fire.

Maken• 7 years ago

SolarCity was initially a different Musk project, that ended in bankruptcy and then he made Tesla buy it to cover the losses. This sounds like they are effectively liquidating SolarCity and trying to make the factories profitable (at least for Panasonic).

perfunctory• 7 years ago

Don’t remember SolarCity declaring bankruptcy.

RankingMember• 7 years ago

It probably would've if it didn't become part of Tesla, but yeah it didn't.

ckastner3• 7 years ago

California state data shows 21 Solar Roof systems were connected by the state’s three investor-owned utilities as of Feb. 28. Only a few others were connected in the northeastern United States [...]

Amazing that Solar Roof got so much news coverage for what, in the end, amounted to practically nil.

I am frequently extremely critical of Elon Musk, but I cannot help but admire his marketing and promotion skills. I believe they are even above Steve Job's. And I'm not being sarcastic, I mean this sincerely.

Every other car company needs a huge marketing budget; Tesla has consistently been getting front page press coverage for free, for more than a decade.

throwayEngineer2• 7 years ago

Both what Musk and Jobs do, are bad for consumers.

Both companies are extremely selective in what they say, and lie about their features, quality and accomplishments.

Not every company does this and gets away with it. But Tesla and Apple manage.

I wonder what demographic of people are okay with lies.

Edit, would someone explain why lying to consumers is a good thing?

zaroth15• 7 years ago

Apple and Tesla are two of the most loved companies in the world by their customers. Tesla actually just won the "Most Loved Brand" rating from Auto Trader [1].

Neither company is perfect, or makes perfect products. Turns out in this world perfect isn't a requirement. Companies can "get away" with failing to deliver 100% of what they promised, when they promised it, if the end result is still delightful.

In short, both Apple and Tesla make delightful products.

[1] https://www.teslarati.com/tesla-most-loved-brand-auto-trader...

sremani• 7 years ago

Lying is different from overly optimistic and promising ideas that did not pan out.

It depends on where you come from, if you are skeptic, its lying. If you are a bit charitable towards Musk or Jobs, its just some idea that did not pan out.

If we live long enough, you would find, success is an exception. So, the older I get I do not buy the hype, but I do not call people with a decent results track record as liars. They might have failed at delivering and thats about it.

willio58• 7 years ago

Such a loaded and polarizing question there.

As an Apple product user and a Tesla-owner hopeful, I see (saw in the case of Jobs) truly innovative people leading these two companies. I would rather take leaders of companies that go against the status quo than those who follow it.

I like that musk doesn’t give a shit about the SEC when he tweets something. It’s the same thing that makes him want to send people to Mars. He’s crazy in a good way.

cmurf• 7 years ago

Even a weakly convincing lie can give a person an easy out of cognitive dissonance. Question is, what about the truth is causing the discomfort that they want or even need the lies?

There is a time limit for lies. I'd prefer they be discovered immediately, as deception and propaganda are a kind of fraud when money or any limited resource is on the line. But it can take a while for these lies to be discovered, quite a lot of the retrospectives use phrasing like "it was always a lie" and "the data was there, we just didn't want to see it" and so on.

I notice many peers and people younger than me have a strong belief in "what comes around, goes around" which I think is provable nonsense, and it makes this problem worse by proposing some force (market or spiritual) will make things right if the offense is bad enough.

zaroth15• 7 years ago

This is what launching early looks like. This is just following the mantra of, "if you're not totally embarrassed by your product on Day 1 you waited too long."

They establish the demand and build anticipation in the product. Then they spend the millions/billions to create it to serve the demand. It seems like a smarter way to do business than the other way around.

Amazing that Solar Roof got so much news coverage for what, in the end, amounted to practically nil.

What do you mean "in the end" -- do you think Tesla has or will abandon the solar roof project? Or is it more likely that they lost focus on Solar Roof during the Model 3 ramp, and that they are still doing the R&D to increase manufacturing yield and longevity of the tiles, and hope to ramp up production later this year?

navigatesol5• 7 years ago

It seems like a smarter way to do business than the other way around

To the superfans everything Tesla does is "smarter".

What do you mean "in the end" -- do you think Tesla has or will abandon the solar roof project?

Well, according to the financials they are winding down Solar City. So.. Yes?

KirinDave2• 7 years ago

But if only 21 units were connected, doesn't that mean they failed to establish demand? Is there actually a waiting list miles long that they're just not filling?

ckastner3• 7 years ago

They establish the demand and build anticipation in the product.

Who's left to do that? The article says that they gutted the solar sales team.

Or is it more likely that they lost focus on Solar Roof during the Model 3 ramp, and that they are still doing the R&D to increase manufacturing yield and longevity of the tiles, and hope to ramp up production later this year?

Do you have an actual source for that, or is that just a scenario you personally are speculating on?

Tesla declined to comment on the article (but for a tiny quote). Not only is that highly unlike Tesla, but if your first assertion is true, ("first establish the demand and build anticipation"), then this silence does not bode well.

TeMPOraL5• 7 years ago

Every other car company needs a huge marketing budget; Tesla has consistently been getting front page press coverage for free, for more than a decade.

Well, they built and sold the first successful electric car in the age where nobody believed this would be possible. They've attempted to and succeeded in forcing the market to accept fully-electric vehicles as the future of transportation. They also appeared sincere about helping to fight climate change throughout the whole thing. This was sure to generate interesting headlines.

Honestly, I wouldn't mind to see more companies trying to force climate-change-mitigating solutions against the will of the market and actually succeeding at it.

_Codemonkeyism2• 7 years ago

"Well, they built and sold the first successful electric car in the age where nobody believed this would be possible."

I beg to differ, everyone thought it's possible but there is no mass market for electric car at a reasonable price point. Volkswagen had several working prototypes in the 1970s especially after the oil shock.

I worked for eBay for some time. They could do most of the stuff that startups around them could do, they had the tech, the ideas, the money and the people. But startups can be net negative for some years, or be happy with $10M revenue, while a project at eBay being net negative would be killed and a $10M project would be thought as too small. Championing a $10M project at eBay for several years would be a career killing move.

So selling 1000 cars a year is a success for a startup (Tesla) but nothing a large company like Volkswagen (11M cars per year) can sustain as a project. Large companies are just not structured in a way (would need to be structured like a VC fund, and some try, e.g. Alphabet) to handle this small but growing opportunities. They need to find the right moment to jump in.

navigatesol5• 7 years ago

Well, they built and sold the first successful electric car in the age where nobody believed this would be possible.

I guess that depends on what you mean by "not possible". Did any engineer doubt an electric car could be made and sold? Maybe no one believed it could be done profitably. That's still the reality.

JudgeWapner• 7 years ago

I believe they are even above Steve Job's

A practical, functional, and affordable electric car is definitely a more revolutionary offering than a smart phone. Smartphones are more ubiquitous and versatile, sure. But they aren't technologically as advanced as a self-driving car that directly competes with ICE vehicles and can be powered from completely renewable sources.

Jobs gets tons of respect from me for giving a fuck about UX. And because of the smartphone revolution, he'll get most of the fame. But he didn't go up against an industry as established and conservative as the auto industry (that has entire laws prohibiting factory-direct sales just to prop up prices and keep sleazy dealers in business!) and actually win. (inb4 pedantic remarks about TSLA's balance sheet: I say Tesla "won" because the auto industry has to take them seriously now; I see their cars everywhere. They weren't just a startup that had "an idea" and sold a few demo models and quit).

Smartphones are everywhere, but they were coming one way or another as manufacturing permitted lower power consumption, higher battery output, and faster CPU/more RAM. Jobs knocked it out of the park because he cared about the UX which is imperative for mobile.

mlindner3• 7 years ago

Amazing that Solar Roof got so much news coverage for what, in the end, amounted to practically nil.

I know engineers who work on Solar Roof and it's definitely not "nil". It's still scaling up. Just give it more time. It's still going through revisions. Keep in mind that when they sell this it needs to last for 50 years on someone's roof. It can't be defective.

austhrow743• 7 years ago

If you're a fan of Musk as a promoter you'd probably be interested in giving this a read [0]. He's not good by evaluation as a public speaker, certainly not what I'd call charismatic, but manages to kill it anyway by just having a well structured presentation. As an autistic salesperson he's basically a role model of mine.

[0] https://medium.com/firm-narrative/want-a-better-pitch-watch-...

taneq• 7 years ago

It's not surprising that solar panels aren't selling so well in the U.S. given how cheap your grid power is. Try paying $0.27/kWh and see how much sense it makes to install some rooftop solar.

Scoundreller• 7 years ago

They pay that in California at peak times.

If you can generate power during those peak times instead, and net meter it against your off-peak use, you can do very well.

mlindner3• 7 years ago

Solar panels sell pretty good for how low the electricity price is. The main reason for that is that solar energy is a lot better for large portions of the US than it is in Europe. See: https://globalsolaratlas.info/?c=32.518447,-36.524111,3

Texas is one of the leading points of growth of Solar at the moment, interestingly, combined with it's low natural gas and fossil fuel cost.

The fact that Germany invested a ton in solar is kind of ridiculous compared to how poorly suited they are for it.

asdff• 7 years ago

Sure you save long term but 4 in 10 Americans can't come up with $400 let alone however much this roof will cost. It's a problem of a lack of cash on hand more than electricity costs, solar pays for itself in x amount of years no matter how much you pay per kWh, and in some cases you can sell excess back to the grid.

https://www.federalreserve.gov/publications/2018-economic-we...

newnewpdro• 7 years ago

So Tesla paid $2.6B for SolarCity, but that didn't even include cell manufacturing so they aren't benefitting from this tariff-stimulated demand for foreign export, Panasonic is?

pavon• 7 years ago

At the time that Tesla and SolarCity merged, the major synergy touted was selling cars, power-walls and solar panels together at the Tesla dealership. They eliminated most of SolarCity's other sales channels like door-to-door sales, and the Home Depot partnership, to focus on sales in the dealerships. Since then their sales have plummeted.

Now Tesla is closing most of its dealerships, eliminated the main sales channel SolarCity had remaining. It looks like their plan is to operate with online-only sales, skipping even an in-person estimate visit, and offloading that do the customers.

I originally thought that the merger was a really bad deal for Tesla. I didn't realize how bad a deal it would be for SolarCity as well.

Robotbeat• 7 years ago

This isn't surprising, and it's not exactly the worst outcome, either.

We already knew Tesla's solar business was WAY down, even though they (well, Solar City) got incentives for the Buffalo plant. But, since Panasonic can export these cells, the plant is still fairly busy as promised, giving much of the employment benefit that the incentives were promising in spite of the Tesla solar slowdown.

That's not a suboptimal result, given the circumstances, IMHO.

{And on the other side, Tesla is also not forbidden from using other lithium or solar cells besides the Panasonic ones if it's more convenient for whatever reason (for instance, Tesla often uses non-Panasonic cells in storage applications), so neither party is locked in to a situation that would be detrimental just because the other party can't immediately deliver. That's also good.}

I don't understand those who think this is some scandal or funny. The incentives seem to be working (stimulating domestic manufacturing) as designed, even showing to be robust in the face of Tesla's solar downturn (temporary, we hope). What's the issue? Are we just all super jaded now?

Tesla's solar factory is exporting most of its cells

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