
Tesla's solar factory is exporting most of its cells - SolaceQuantum
https://www.reuters.com/article/us-tesla-solar-exclusive/exclusive-teslas-solar-factory-is-exporting-most-of-its-cells-document-idUSKCN1SL1H5
======
inflatableDodo
>...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
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!

~~~
zaroth
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.

~~~
magduf
They're incentivizing domestic production, but at two costs: 1) environmental,
from shipping stuff around the world several times (parts into the US to
SolarCity, cells out of the US to final assemblers, assembled panels back into
the US for final sale and use), and 2) cost to domestic purchasers. Finally
there's 3) reduced demand for solar panels due to higher costs, which means we
don't produce as much power this way, and instead use other means (generally
fossil fuel).

All in all, it's a terrible deal for us.

If we're going to shoot ourselves in the foot on something made abroad, I
propose we do it for smartphones. Slap a giant tariff on any cellphone made
outside the US, like 1000%. Let's see how Americans like being stuck with
their aging smartphones or having to spend $10k for a new one. Oh yeah, make
sure the tariff applies to the LCD/OLED screens too, since we can't make those
here.

~~~
zaroth
Just to put it in perspective, the 30% tariff on imported cells resulted in a
net impact of about a 5% cost increase to the end consumer. [1]

The basic macroeconomic equations always tilt to the side of free trade. I
majored in economics. The basic theories work in an ideal and simplified
world, and don't account for all the variables. The "hollowing out" of
American manufacturing was a result of globalization spurred by free trade.
Any government intervention which isn't a subsidy is going to be less than
ideal theoretically, but in a geopolitical reality can still be the right
choice.

And to be sure, both the tax credit and net metering still provide a huge
government subsidy for adding solar generation.

[1] - [https://news-media.energysage.com/wp-
content/uploads/2018/05...](https://news-media.energysage.com/wp-
content/uploads/2018/05/Price_Impact_Solar_Tariff-1024x555.png)

~~~
rory096
> The "hollowing out" of American manufacturing was a result of globalization
> spurred by free trade.

Putting aside the question of whether domestic manufacturing is more desirable
than domestic production in other industries, this claim is not borne out by
the data. Real manufacturing output is at an all-time high, passing the 2007
peak last year:
[https://fred.stlouisfed.org/series/OUTMS](https://fred.stlouisfed.org/series/OUTMS)

Perhaps you mean manufacturing _employment_?

~~~
int_19h
There's an article that claims that domestic manufacturing numbers are very
misleading, because of stuff like this:

"To make the output volume comparable from one year to the next, the
statisticians aggregating the data adjust for price changes, as well as
improvements in product quality. For example, let’s say statisticians want to
figure out how much the sales of Intel processors grew in 2017 versus 2016.

The problem is, the processor released in 2017 is superior to that sold in
2016 in many tangible ways. But how do you account for the fact that a 2017
processor provides users with more value? In general, statisticians assume the
difference in value between the two models is just the difference in their
prices. If, say, the 2017 processor costs twice as much as the 2016 one does,
then selling one 2017 processor counts as selling two of the 2016 versions in
the statisticians’ books."

[https://qz.com/1269172/the-epic-mistake-about-
manufacturing-...](https://qz.com/1269172/the-epic-mistake-about-
manufacturing-thats-cost-americans-millions-of-jobs/)

~~~
rory096
This critique doesn't make a lot of sense to me. Why _wouldn 't_ you count a
processor that costs twice as much as twice the economic output?

It's vaguely reminiscent of the claim that inflation data is understated
because computers at the same price have gotten _better_... except opposite.
There's no adjustment for quality in the sense that a quality improvement
without a change in price is estimated & counted. It's only if the processor's
_actual_ price doubles — i.e. it brings in twice as much revenue!

Is that even something we observe in computers to a significant extent? Even
if it is, is it a bad thing? If homes increase in size by 50%, simultaneously
increase in price by 50%, and an equal quantity of them are sold, is home
production not up 50%?

This feels like an argument that automation in manufacturing has only
increased because the distribution of production has shifted towards the
highly automated semiconductor industry, but it's couched in a bizarre claim
that increases in monetary value of output for the computer industry just
don't count.

------
ckastner
> _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.

~~~
throwayEngineer
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?

~~~
zaroth
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...](https://www.teslarati.com/tesla-most-loved-brand-auto-
trader-2019-new-car-awards/)

~~~
anthonybsd
>Tesla actually just won the "Most Loved Brand" rating from Auto Trader

I suspect this rating will probably do a 180 soon. Tesla cars (all of them)
aren't that old. Just wait until a lot of owners are thoroughly in the used
bracket and problems like [1] and [2] start rearing their head.

[1] - [https://carbuzz.com/news/tesla-owners-are-furious-and-
nothin...](https://carbuzz.com/news/tesla-owners-are-furious-and-nothing-is-
being-done)

[2] - [https://www.thedrive.com/news/27945/a-single-component-
can-b...](https://www.thedrive.com/news/27945/a-single-component-can-brick-
older-teslas-and-tesla-wont-fix-it)

~~~
zaroth
One thing to keep in mind is that every Model S and X car is built to order.
Whereas the Model 3 is mass produced up front. Parts availability for a mass
produced car at a run rate of nearly 500k units/year (by the end of 2019) is
going to be very different than parts availability for a made-to-order car
selling 50k units / year.

Tesla has to scale their service capacity tremendously. But they know this,
and talk about it a lot with investors. At the end of 2016 they had made a
cumulative 170k cars, by 2017 it was 272k, 2018 it was 526k, and by the end of
2019 it will be nearly 1 million.

They have a technically sophisticated product which would ordinarily result in
a tremendous number of service calls for things which aren't even technically
repairs. I think the huge base of YouTube videos and forum posts helps saved
them a _lot_ in this regard, as I will turn to Google searches for answers
before calling Tech Support.

Tesla does have a very unique service model. They have entire states which
legally bar them from operating service centers. They do mobile service in
your driveway. They will text back and forth with you to help resolve an
issue, and remote access your vehicle logs to diagnose a problem. The car will
pre-order parts at your local service center if it detects certain anomalies.

I am sure that a minority of owners will experience Tesla "service hell". But
I doubt very much that the Model 3 will turn out to be a lemon. So I think the
rating will stand the test of time, particularly with OTA updates continuously
making the car better in many measurable ways on a practically monthly basis.

~~~
hef19898
So Tesla competes in the premium market segment and outsources support,
partially, to Google search, YouTube and do it yourself-tutorials? Doesn't
sound very premium to me. Cars the age of the average Tesla are supposed to
run. And for that price tag customers can and do expect prompt service.

But I have to admit, marketing vise Tesla and Musk are even better than VW.
Which _is_ an achievement.

~~~
zaroth
Tesla incentivized the massive library of tutorials on YouTube, Tesla blogs,
and such with their referral code program.

It's a huge asset, and strictly better than not having that fan base out there
explaining and demo'ing every little new feature that Tesla releases. I'm not
sure how you consider that a negative.

Car companies have always strived for a loyal following of ardent fans to talk
ceaselessly about how much they love their vehicle. Tesla does it better than
most.

------
Maken
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
Don’t remember SolarCity declaring bankruptcy.

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

~~~
nscalf
Do we have any indications of this? Or is this just more wild speculative hate
towards Musk?

~~~
planteen
Many questioned the SolarCity deal from the beginning. It was all over the
financial news. There is also a shareholder lawsuit over it.

[https://tslaq.org/solarcity-lawsuit/](https://tslaq.org/solarcity-lawsuit/)

[https://www.fool.com/investing/2017/04/20/why-investors-
shou...](https://www.fool.com/investing/2017/04/20/why-investors-should-have-
known-teslas-solarcity-a.aspx)

"What's becoming increasingly clear about Tesla's buyout of SolarCity is that
it was a huge benefit to Musk and his cousins Lyndon and Peter Rive. The three
had $100 million of solar bonds issued by SolarCity, bonds that were recently
bought back by Tesla. The three will have bonds transfered to Tesla under the
same terms, unlike outside investors, but would you rather have a struggling
SolarCity owe you $100 million, or market darling Tesla, who has easy access
to equity markets?

The debt is on top of the 22.2 million SolarCity shares that Musk turned into
Tesla shares and the 2.3 million shares the Rives converted. Had SolarCity
gone bankrupt, as some major residential solar rivals have done, rather than
being bought by Tesla, they would have lost hundreds of millions combined.

A bailout of their SolarCity stake to save Musk and the Rives hundreds of
millions is worth considering when you see SolarCity's operations being shut
down and manufacturing being turned over to Panasonic. At this point, it
doesn't look like the SolarCity acquisition was a good deal at all. Musk could
prove that wrong eventually, but so far, there's little indication he has much
interest in growing solar under Tesla's umbrella."

------
pavon
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.

------
pault
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.

~~~
nabla9
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.

~~~
hef19898
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.

~~~
bigtex
Space X had over a $100 million invested in Solar City.

~~~
toomuchtodo
There is a bit of nuance to this. SpaceX invested cash reserves in Solar City
bonds. This wasn't an equity investment. While one can argue that people
paying their electric bill monthly isn't as risk free of US treasuries (and
that would be accurate), the risk was appropriately rated based on the
returns.

------
Robotbeat
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?

------
taneq
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.

~~~
asdff
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...](https://www.federalreserve.gov/publications/2018-economic-well-being-
of-us-households-in-2017-dealing-with-unexpected-expenses.htm)

------
newnewpdro
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?

