Supposedly panel costs are not that significant compared to installation, and kW per unit area matters more in the rooftop economics. That was the rationale at the time of the Silevo acquisition anyway.

Have they ever said they wouldn't use cheap panels from China? Why would you assume Tesla would procure more expensive panels if it didn't make sense to do so?

OK, I was thinking of SolarCity as a panel manufacturer. Are they just an installer? If so then what makes them worth $2.6 billion?

They were just an installer but they acquired Silevo in 2014. They built a 1GW plant in Buffalo, NY, cut the ribbon last year and are supposedly ramping production right now:

http://www.pv-tech.org/editors-blog/solarcitys-1gw-buffalo-f...