BUFFALO, NY (WBFO) – Shares of Tesla lost approximately nine percent of their value Friday, as the high-tech company moves forward amid concerns including a Securities and Exchange Commission investigation, comments made by founder Elon Musk and a report that Tesla may not, after all, purchase all the output from the Buffalo-based factory it now shares with Panasonic.
Tesla, which co-manages the mammoth $750 million factory on South Park in Buffalo’s Riverbend neighborhood, is reportedly backing away from an agreement to buy all production by Panasonic at the facility. Panasonic, for its part, told the Wall Street Journal it is now selling some of the components made locally to other solar panel manufacturers.
“We’re monitoring the situation closely,” said Lieutenant Governor Kathy Hochul during a visit to Buffalo Friday. “We’re fully expecting that the jobs that were promised will be forthcoming.”
It’s just one of several news stories putting Tesla under the microscope. Last year, the SEC began looking into whether the company misled investors about problems in the production of its Model 3 cars.
Eyebrows were also raised more recently by Musk, who suggested he was considering turning the publicly-traded company into a private entity. It raises questions by some whether the funding to do so is really in place.
Anthony Ogorek of Ogorek Wealth Management in Williamsville says while Musk is a genius and a visionary, people who think as Musk does tend to act differently and get their ventures in trouble. He pointed out the original SolarCity business model, which was to produce and then lease solar panels and components to customers. Many, he tells WBFO, discovered better deals by simply buying the panels.
It’s just one of several turns since work began on the SolarCity factory, the largest investment in Governor Andrew Cuomo’s Buffalo Billion program. SolarCity was subsequently acquired by Tesla.
“The question is, did Tesla buy the company because SolarCity was rapidly going down the tubes? The answer is probably yes,” Ogorek said. “What you’ve got is a cash-starved company, which is Tesla, buying another company – Solar City – which was going down.”
Ogorek added that Tesla had no prior manufacturing experience, hence the addition of Panasonic to the Buffalo facility.
He criticizes the construction of that giant factory as “irresponsible” and an “ill-conceived scheme” by the Cuomo Administration that was motivated by a desire to win votes.
Lieutenant Governor Hochul, while saying they were holding Tesla to its promises of job creation, defended the construction of the factory.
“This is a place that was an abandoned steel plant for decades,” she said. “There is life over there and it’s bringing back the neighborhood.”
Hochul added that in the event of a worst-case scenario – the bottoming out of Tesla – the factory could be repurposed for another business. She told reporters Friday the facility is not a Tesla property but rather a “state asset.”