Tesla Motors Inc. has revealed plans to team up with Japanese electronics company Panasonic Corp. for production of solar energy parts for SolarCity Corp. as the electric car maker’s CEO push closer to acquisition of the solar power company.
In a statement posted on its corporate blog late on Sunday, Tesla said it has signed a non-binding letter with Panasonic to commence manufacturing of solar energy components at a SolarCity facility in the United States.
Production of photovoltaic cells and modules is scheduled to commence at the facility in Buffalo, New York from 2017. These components will be used for SolarCity’s solar energy systems.
The proposed deal appears to bring Tesla Chief Executive Elon Musk’s desire of merging both the electric automaker and the solar panel company nearer to fruition. He intends creating a single company that will provide both electric vehicles and electricity needed to power such to consumers.
“We are excited to expand our partnership with Panasonic as we move toward a combined Tesla and SolarCity,” Tesla Chief Technical Officer JB Straubel said in the release. “By working together on solar, we will be able to accelerate production of high-efficiency, extremely reliable solar cells and modules at the best cost.”
The proposed SolarCity acquisition has been plagued by corporate governance issues, given the boards of both the company and the electric car maker are significantly interwoven. Musk is a chief financier of the San Mateo, California-based solar panel company and CEO Lyndon Rive is his first cousin. Majority of Tesla board directors (six out of seven) have connection to SolarCity.
The solar-energy parts deal depends on approval of Tesla’s acquisition of SolarCity by the boards of the two companies. The respective shareholders are due to vote on this matter on Nov. 17.
Musk’s plan to combine Tesla and SolarCity has been questioned by some, considering the issues facing the latter company. The major American solar panel installer has been battling to avoid defaulting on its debt. It disclosed in its latest quarterly reports that it was almost in breach of bonds covenants. SolarCity is forecast to record losses for at least two additional years.
But Tesla’s CEO has been quick to suggest how close the two companies are for a merger not to be faulted. He maintained that it “is largely an accident of history” for the companies to have existed as separate entities at all.
The latest solar-panel deal will not be the first between Tesla and Panasonic. They already have a partnership, which includes the building of a lithium-ion gigafactory in Nevada at a cost of $5 billion. The plant will produce batteries for Tesla’s electric vehicles, especially the Model 3, as well as energy storage products for utilities and homes.
Tesla says it intends having a long-term purchase commitment with Panasonic for the production of the photovoltaic cells.
Panasonic shares were trading higher by up to 2.5 percent in Tokyo on Monday, according to Bloomberg.
The Japanese company is better known as a consumer electronics manufacturer, but it also provides products and services to businesses. It is increasingly shifting its attention to housing, car batteries and information systems.