January 23, 2018 / 11:20 PM / in 2 years

Fine print in Trump solar tariff holds some good news for Tesla

(This version of the Jan. 23 story was corrected to remove incorrect reference to First Solar benefiting from solar cell exemption)

A Tesla logo is seen in Los Angeles, California U.S. January 12, 2018. REUTERS/Lucy Nicholson

By Nichola Groom

LOS ANGELES (Reuters) - Electric vehicle maker and solar installer Tesla Inc said on Tuesday that it does not expect President Donald Trump’s solar tariff to have much impact on its high-tech solar manufacturing ambitions, thanks to a clause exempting a vast amount of solar panel components from the levies.

Trump’s order, signed into law on Tuesday, imposes a 30 percent tariff on fully assembled imported solar panels as well as the cells of which the panels are made - a move intended to protect American jobs but which the solar industry worries will raise costs and trigger thousands of layoffs.

But in a twist destined to help the California company, the solar cell tariff only kicks in after 2.5 gigawatts worth hit U.S. shores each year.

Tesla uses solar cells in its nascent solar roof tile business. The tiles generate electricity without the need for a traditional panel. Tesla also has plans to build conventional panels using imported cells for its U.S.-based residential installation business, which it also hopes to grow over the coming years.

Tesla expects to be able to import foreign cells for its tile and panel businesses free of tariffs thanks to the large exemption for cells, a source familiar with the company’s operations said on Tuesday.

Only 500 MW worth of solar cells were imported into the United States in total last year, according to the Solar Energy Industries Association, a fifth of what is being exempted from Trump’s tariff.

Baird analyst Ben Kallo agreed the tariff was generally positive for Tesla as it will make its domestic products more competitive with imports - though he noted its installation business will pay higher prices for imported panels in the short term. Tesla shares rose $1.23, or 0.3 percent, to close at $352.79 on Tuesday.

Tesla had been part of a group of domestic manufacturers that lobbied against tariffs on solar products.

Reporting by Nichola Groom; Editing by Cynthia Osterman

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