Panasonic said it will cease solar manufacturing operations at the Tesla factory by the end of May. The company will exit the factory by September. Panasonic employs about 380 people at the factory. Those employees will be given severance packages. Panasonic said it will work with Tesla to identify and hire qualified applicants from its impacted workforce. Panasonic said in its announcement that Tesla plans to hire qualified applicants to new positions needed to support its solar and energy manufacturing operations in Buffalo.
In 2016 Panasonic struck a deal to jointly produce solar cells at Tesla's "Gigafactory 2" plant in Buffalo, New York State. Panasonic committed to share the cost of equipment needed for the plant.
The joint venture deepened the relationship between the two companies, which already had established a partnership to produce battery cells at Tesla's factory near Reno.
Panasonic's decision to exit the factory is bad news for Tesla which wants to scale up its energy business as well as meet employment requirements at the state-funded factory.
The Buffalo factory was built with $750 million in taxpayer funds and then leased to Tesla. Under a deal reached with the state, Tesla must employ 1,460 people there by April or face a $41.2 million penalty. As reports of Panasonic's exit circulated, Tesla told Empire State Development, the New York economic development authority that oversees the factory, that it has exceeded its hiring commitment.
Panasonic still works with Tesla under a separate joint venture to produce battery cells at a massive factory near Reno, Nevada. Panasonic said in a statement that the decision "will have no impact on Panasonic and Tesla's strong partnership in Nevada".