Exclusive-Tesla in talks with Chinese firms to buy $2.9 billion worth of solar equipment, sources say

March 20 (Reuters) – Tesla Inc (TSLA) is seeking to buy $2.9 billion worth of equipment from Chinese suppliers such as Suzhou Maxwell Technologies to make solar panels and batteries, two people familiar with the matter said, as Chief Executive Elon Musk aims to add 100 gigawatts of solar capacity in the United States.

Musk said in January that solar power could meet all of the U.S.’s electricity needs, including the growing demand from more and more data centers. A job posting on Tesla’s website states that its goal is to “deploy 100 gigawatts of solar manufacturing plants in the United States by the end of 2028.”

Suzhou Maxwell Technology Co., the world’s largest producer of screen-printing equipment used to make solar cells, is one of the leading candidates to supply machinery for the project and has been seeking export approval from China’s Commerce Ministry, according to two people and a third person familiar with the matter. The sources declined to be named because the information is not public.

Other potential suppliers include Shenzhen SC New Energy Technology Co. and Laplace New Energy Technology Co., the first two people said.

Some of the equipment, which is estimated to be worth 20 billion yuan ($2.9 billion), including screen printing production lines, requires export approval from Chinese regulators, people familiar with the matter said. It’s unclear how many devices will need approval or how long it will take.

Chinese companies have been told to deliver equipment by this fall, three people familiar with the matter said, with two saying they would ship to Texas. People familiar with the matter said that the solar power generation facilities Musk plans to build will mainly be used by Tesla, but some of the solar power generation facilities will be used to power SpaceX satellites.

The potential order highlights an issue facing the United States as it seeks to reduce its reliance on China — reviving U.S. manufacturing will still require some level of trade with the world’s second-largest economy.

Chinese media reported last month that Tesla visited a number of Chinese solar companies. Details of the companies in advanced negotiations, the expected size of potential purchases, delivery timelines and regulatory requirements are reported here for the first time.

Shares of Suzhou Maxwell, SC New Energy and Laplace New Energy rose more than 7% after the Reuters report.

Tesla, China’s Ministry of Commerce, Suzhou Maxwell, Shenzhen SC New Energy and Laplace New Energy did not respond to Reuters’ requests for comment.

Tesla’s order would be a major boost for Chinese solar manufacturing equipment producers, which have been struggling with weak demand due to overproduction at home.

Meanwhile, the U.S. solar market is heavily protected by tariffs aimed at limiting imports of cheap panels and cells from China and Southeast Asia, where many Chinese producers have subsidiaries.

However, the Biden administration is excluding solar manufacturing equipment from tariffs in 2024 at the urging of U.S. solar panel manufacturers who believe they have nowhere else to buy the machinery they need to build domestic factories. The Trump administration extended that exemption, and the United States has been pushing to build its own solar supply chain to reduce reliance on Chinese companies.

Musk criticized the tariff barriers for making the economics of deploying solar energy “artificially high” in the United States, which is facing severe power shortages caused by surging demand for artificial intelligence data centers and manufacturing.

His solar ambitions stand in stark contrast to the energy policies of his former employer, President Donald Trump, who sought to maximize U.S. fossil fuel production and cut federal subsidies for solar and wind projects that he said were costly and unreliable.

Musk briefly worked for the Trump administration running the Department of Government Effectiveness, which oversaw widespread layoffs of federal workers to save money.

According to the U.S. Energy Information Administration (EIA), U.S. electricity consumption will hit a second consecutive record high in 2025 and will rise further in 2026 and 2027.

Building 100 gigawatts of solar manufacturing capacity within a few years would be an astonishing feat, and Musk is known for making big promises on ambitious timelines but often failing to deliver.

According to a report released last year by the American Public Power Association, overall U.S. generation capacity will be 1,300 gigawatts by 2024. Of this, only 10%, or 135 GW, is solar powered.