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Deeper Tesla, Panasonic ties could lead to a Smart Home future

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A growing partnership between Tesla and Panasonic on solar cell production and storage batteries may one day eliminate residential reliance on the power grid and provide the capacity to recharge electric cars each night. However, to secure this collaboration on solar cell and module production, Tesla’s proposed SolarCity acquisition must first be approved by shareholders on November 17, 2016.  

In the meantime, Tesla and Panasonic have entered into a non-binding letter of intent under which they will begin collaborating on the manufacturing and production of photovoltaic (PV) cells and modules in Buffalo, New York. The Buffalo facility will become the largest solar panel factory in North America, with expectations to employ 1,460 workers and produce up to 10,000 panels per day.

A blog post on Tesla’s website acknowledged that the continued partnership with Panasonic is an important step in creating fully-integrated energy products for businesses, homeowners, and utilities and furthers Tesla’s mission toward a sustainable energy future.

The Relationship between Tesla and Panasonic

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The October 16, 2016 announcement confirmed that this newest collaboration extends the established relationship between Tesla and Panasonic, which includes the production of electric vehicle and grid storage battery cells at Tesla’s Gigafactory outside Sparks, Nevada. The $5 billion Gigafactory will produce batteries for the Model 3 electric car and energy storage products for home and utilities.

“We expect that the collaboration talks will lead to growth of the Tesla and Panasonic relationship,” said Shuuji Okayama, vice president of Panasonic’s Eco Solutions unit.

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Battery cell production will begin by late 2016 and is expected to reach full capacity by 2018, producing more lithium ion batteries annually than were produced worldwide in 2013. In cooperation with Panasonic and other strategic partners, the Gigafactory will produce batteries that have the capacity to drive down the per kilowatt hour (kWh) cost of a battery pack by more than 30 percent. That anticipated cost drop is crucial, as current battery costs are untenable.

Panasonic plans to begin PV cell and module production at the Buffalo facility in 2017, and Tesla intends to provide a long-term purchase commitment for those cells from Panasonic. The Tesla/ Panasonic collaboration could mean that energy from solar panels will be pumped into home storage batteries. No longer would residential home solar systems follow the traditional model of selling back to utilities.

Panasonic’s Future Home

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Panasonic demonstrates a ‘PanoHome’ smart home in Malaysia [Source: Panasonic]

The proposed Tesla/ Panasonic collaboration would shift Panasonic’s historic focus from consumer electronics products and onto housing, automotive information systems, and vehicle batteries, which “would be a win” for Panasonic, according to Bloomberg. Panasonic’s transition to the home electric market began in 2009 with its Tokyo Future Home, which features the latest environmental technologies and a few prototypes. The house is designed to aid natural ventilation and cut down on air conditioning. The walls of the house are lined with a thin and efficient insulator that cuts down on heating and cooling costs. LED lights, which use much less power than incandescent bulbs and last longer than current fluorescent models, are sensor-controlled. Extra generated electricity is stored in a prototype accumulator battery of lithium ion cells for later use. The lights, power, heating, and other apps are controlled in a high-tech in-house network with living room TV at the center.  

The aim of Panasonic’s energy-saving house is to be carbon neutral in energy usage.

Tesla’s Smart House Could Utilize Panasonic’s Technology

Tesla is currently developing advanced systems that adapt to the needs of the environment with the goal is to bring top quality affordable systems that provide energy efficiency, quality of life, and home security.

Already, smart home system are able to cut electric energy spending by 50%, or in some cases go off-grid using Tesla batteries combined with solar. Lights, air conditioning, and all other appliances are automatically managed, turning on and off, depending on the time of day, temperature, motion sensors, door and window detectors, and electricity rates. Fingerprint scanner and pin lock, video surveillance, night vision camera, motion sensors, SMS alarms, fire and flood sensors are accessed through a phone.

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In 2014, Panasonic opened a smart city near Tokyo that is designed to drastically cut CO2 emissions by 70%, reaching to 1990 levels. It will attempt to reduce water usage by 30 percent and achieve 30 percent renewable energy usage. Called the Fujisawa Sustainable Smart Town (SST), the subdivision southwest of Tokyo focuses on solar power and other environmentally friendly technologies.

Together, Tesla and Panasonic may be able to ground ambitious plans for solar-powered systems that charge smart homes and electric cars and make decentralized renewable energy systems that power homes and car a practical reality. “We are excited to expand our partnership with Panasonic as we move towards a combined Tesla and SolarCity,” JB Straubel, Tesla’s chief technical officer and co-founder, said in a statement. “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 Role of the Projected SolarCity Acquisition

The Tesla/ Panasonic collaboration moving forward is contingent on Tesla’s acquisition of SolarCity, but shareholders must approve the move. Tesla’s bid to acquire SolarCity has been fraught with corporate governance issues because the boards of both companies are deeply intertwined.

Tesla co-founder Elon Musk’s effort to unite Tesla and SolarCity has been under close scrutiny, given six of the seven directors on Tesla’s board have SolarCity ties and SolarCity’s CEO, Lyndon Rive, is Musk’s first cousin.

SolarCity, among the top installers of residential rooftop solar panels in the U.S., acquired solar manufacturer Silevo in 2014. The transaction gave SolarCity the factory in Buffalo where Panasonic will begin photovoltaic cell and module production. If the SolarCity acquisition is successful, Tesla will use the cells and modules in a solar energy system that will work seamlessly with Powerwall and Powerpack, Tesla’s energy storage products. With the aid of installation, sales, and financing capabilities from SolarCity, Tesla will bring an integrated sustainable energy solution to residential, commercial, and grid-scale customers.

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Carolyn Fortuna is a writer and researcher with a Ph.D. in education from the University of Rhode Island. She brings a social justice perspective to environmental issues. Please follow me on Twitter and Facebook and Google+

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Investor's Corner

xAI targets $5 billion debt offering to fuel company goals

Elon Musk’s xAI is targeting a $5B debt raise, led by Morgan Stanley, to scale its artificial intelligence efforts.

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(Credit: xAI)

xAI’s $5 billion debt offering, marketed by Morgan Stanley, underscores Elon Musk’s ambitious plans to expand the artificial intelligence venture. The xAI package comprises bonds and two loans, highlighting the company’s strategic push to fuel its artificial intelligence development.

Last week, Morgan Stanley began pitching a floating-rate term loan B at 97 cents on the dollar with a variable interest rate of 700 basis points over the SOFR benchmark, one source said. A second option offers a fixed-rate loan and bonds at 12%, with terms contingent on investor appetite. This “best efforts” transaction, where the debt size hinges on demand, reflects cautious lending in an uncertain economic climate.

According to Reuters sources, Morgan Stanley will not guarantee the issue volume or commit its own capital in the xAI deal, marking a shift from past commitments. The change in approach stems from lessons learned during Musk’s 2022 X acquisition when Morgan Stanley and six other banks held $13 billion in debt for over two years.

Morgan Stanley and the six other banks backing Musk’s X acquisition could only dispose of that debt earlier this year. They capitalized on X’s improved operating performance over the previous two quarters as traffic on the platform increased engagement around the U.S. presidential elections. This time, Morgan Stanley’s prudent strategy mitigates similar risks.

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Beyond debt, xAI is in talks to raise $20 billion in equity, potentially valuing the company between $120 billion and $200 billion, sources said. In April, Musk hinted at a significant valuation adjustment for xAI, stating he was looking to put a “proper value” on xAI during an investor call.

As xAI pursues this $5 billion debt offering, its financial strategy positions it to lead the AI revolution, blending innovation with market opportunity.

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Tesla tops Cathie Wood’s stock picks, predicts $2,600 surge

Tesla’s future lies beyond cars—with robotaxis, humanoid bots & AI-driven factories. Cathie Wood predicts a 9x surge in 5 years.

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Cathie Wood shared that Tesla is her top stock pick. During Steven Bartlett’s podcast “The Diary Of A CEO,” the Ark Invest founder highlighted Tesla’s innovative edge, citing its convergence of robotics, energy storage, and AI.

“Because think about it. It is a convergence among three of our major platforms. So, robots, energy storage, AI,” Wood said of Tesla. She emphasized the company’s potential beyond its current offerings, particularly with its Optimus robots.

“And it’s not stopping with robotaxis; there’s a story beyond that with humanoid robots, and our $2,600 number has nothing for humanoid robots. We just thought it’d be an investment, period,” she added.

In June 2024, Ark Invest issued a $2,600 price target for Tesla, which Wood reaffirmed in a March Bloomberg interview, projecting the stock to reach this level within five years. She told Bartlett that Tesla’s Optimus robots would drive productivity gains and create new revenue streams.

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Elon Musk echoed Wood’s optimism in a CNBC interview last month.

“We expect to have thousands of Optimus robots working in Tesla factories by the end of this year, beginning this fall. And we expect to scale Optimus up faster than any product, I think, in history to get to millions of units per year as soon as possible,” Musk said.

Tesla’s stock has faced volatility lately, hitting a peak closing price of $479 in December after President Donald Trump’s election win. However, Musk’s involvement with the White House DOGE office triggered protests and boycotts, contributing to a stock decline of over 40% from mid-December highs by March.

The volatility in Tesla stock alarmed investors, who urged Musk to refocus on the company. In a May earnings call, Musk responded, stating he would be “scaling down his involvement with DOGE to focus on Tesla.” Through it all, Cathie Wood and Ark Invest maintained their faith in Tesla. Wood, in particular, predicted that the “brand damage” Tesla experienced earlier this year would not be long term.

Despite recent fluctuations, Wood’s confidence in Tesla underscores its potential to redefine industries through AI and robotics. As Musk shifts his focus back to Tesla, the company’s advancements in Optimus and other innovations could drive it toward Wood’s ambitious $2,600 target, positioning Tesla as a leader in the evolving tech landscape.

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Investor's Corner

Goldman Sachs reduces Tesla price target to $285

Despite Goldman Sach’s NASDAQ: TSLA price cut to $285, Tesla boasts $95.7B in revenue & nearly $1T market cap.

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(Credit: Tesla)

Goldman Sachs analysts cut Tesla’s price target to $285 from $295, maintaining a Neutral rating.

The adjustment reflects weaker sales performance across key markets, with Tesla shares trading at $284.70, down nearly 18% in the past week. The analysts pointed to declining sales data in the United States, Europe, and China as the primary driver for the revised outlook. In the U.S., Tesla’s quarter-to-date deliveries through May fell mid-teens year-over-year, according to Wards and Motor Intelligence.

In Europe, April registrations plummeted 50% year-over-year, with May showing a mid-20% decline, per industry data. Meanwhile, the China Passenger Car Association (CPCA) reported a 20% year-over-year drop in May, despite a 5.5% sequential increase from April. Consumer surveys from HundredX and Morning Consult also shaped Goldman Sachs’ lowered delivery and EPS forecasts.

Goldman Sachs now projects Tesla’s second-quarter deliveries to range between 335,000 and 395,000 vehicles, with a base case of 365,000, down from a prior estimate of 410,000 and below the Visible Alpha Consensus of 417,000. Despite these headwinds, Tesla’s financials remain strong, with $95.7 billion in trailing twelve-month revenue and a $917 billion market capitalization.

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Regionally, Tesla’s challenges are stark. In Germany, the German road traffic agency KBA reported Tesla’s May sales dropped 36.2% year-over-year, despite a 44.9% surge in overall electric vehicle registrations. Tesla’s sales fell 29% last month in Spain, according to the ANFAC industry group. These declines highlight shifting consumer preferences amid growing competition.

On a positive note, Tesla is making strategic moves. The Model 3 and Model Y are part of a Chinese government campaign to boost rural sales, potentially mitigating losses. Piper Sandler analysts reiterated an Overweight rating, emphasizing Tesla’s supply chain strategy.

Alexander Potter stated, “Thanks to vertical integration, Tesla is the only car company that is trying to source batteries, at scale, without relying on China.”

As Tesla navigates these delivery challenges, its focus on innovation and supply chain resilience could help it maintain its edge in the electric vehicle market despite short-term hurdles.

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