Tesla's solar panel factory in South Buffalo is getting closer to launch.
More than six months after unveiling sleek solar roofing tiles that are expected to be a primary product of the sprawling RiverBend factory, Tesla started to take orders for solar roofs from customers Wednesday.
The announcement is a key step forward for Tesla as it brings its solar roof to market – and is a significant milestone for the Buffalo factory as well. With orders beginning to come in, Tesla will start to have a sense of the demand for its solar roofing product and how quickly it will need to ramp up production at the South Park Avenue factory to meet those needs.
The solar roof won't be cheap – Tesla estimated it would cost $38,300 for a two-story home in the Buffalo Niagara region with 2,000 square feet of space. Between subsidies and the value of the energy it will produce, the company said a homeowner who installs one will come out about $11,300 ahead after 30 years.
That's just an estimate. Tesla doesn't actually install any rooftop solar in the Buffalo Niagara region.
But the estimated cost of the solar roof is less than many analysts had expected, and could help Tesla market its new roof, which initially will only be available in California and then gradually rolled out in other markets.
"In most cases, it ultimately pays for itself by reducing or eliminating a home’s electricity bill," the company said in a blog post. "Although the cost of our solar tiles is more expensive up front, it can be more than offset by the value of energy the tiles produce."
Tesla's solar roof, however, may face its toughest competition in Northeastern markets, like Buffalo and upstate New York, where less expensive asphalt shingles are the norm. Asphalt shingles will cost about half as much as Tesla's solar roofing tiles, according to the company's cost estimates. In contrast, the solar roof materials cost less than comparable tile, metal and slate roofing materials that are more popular elsewhere, Tesla said.
The solar roof is an important part of Tesla's efforts to revamp the SolarCity rooftop solar installation business it acquired last November. Since then, Tesla has scaled back SolarCity's growth plans, cut advertising and eliminated door-to-door sales, while putting a focus on premium products, like the solar roof, that also can be paired with the battery storage systems that the electric vehicle maker produces.
Tesla said last week that it is on track to start making the solar roof tiles on a pilot basis by the end of June at its facility in Fremont, Calif.
Once all the kinks are worked out there, Tesla said it expects to shift production "shortly thereafter"to its gigafactory in Buffalo, which will be the biggest solar panel factory in the Western Hemisphere, built with $750 million in state subsidies through the Buffalo Billion economic-development program.
While Tesla previously has said it expected to start production in Buffalo this summer, it did not provide a more specific timetable last week for ramping up the RiverBend factory, instead tying the launch of manufacturing in Buffalo to whenever it is that the pilot production phase in California is completed.
Tesla has pledged to create 500 manufacturing jobs at the factory, along with nearly 1,000 other positions in various support, sales and administrative roles in Buffalo. Success of the solar roof product would have a big impact on the Buffalo Niagara economy.
Tesla and its partner, Panasonic, have posted openings for more than two dozen different positions at the 1-million-square-foot facility in Buffalo, ranging from top engineering and management jobs to maintenance technicians. While SolarCity officials did not respond Wednesday to a request to discuss their hiring plans in Buffalo, the pace of hiring is likely to be gradual as the factory ramps up its production, hitting full capacity in 2019.
Tesla co-founder and CEO Elon Musk views Tesla's solar roof as a revolutionary product that is designed to replace the clunky solar panel arrays now mounted on homeowners' roofs. Tesla's solar roof, using glass tiles that have solar cells inside, is intended to serve both as the home's roof and as a source of renewable energy.
"This will be economically a no-brainer," Musk said earlier this month at a technology conference. "We think it will look great, and it will last."
The roof comes with a 30-year warranty on the power system. The warranty on the tiles is for the life of the house.
"This is toughened glass," Musk said at the conference. "Well after the house has collapsed, the glass tiles will still be there."
Slo-mo hail cannonball impacting Tesla solar roof tile https://t.co/MMBAcUD9iC
— Elon Musk (@elonmusk) May 10, 2017
The first solar roofs will come in Tesla's black glass smooth and textured finishes, Musk said. Tesla plans to start taking orders for its Tuscan and French Slate roofing tiles in about six months.
The first solar roofs will be installed in the United States, followed by overseas markets next year, Musk said.
The roof product, designed to look like a conventional roof even though it has solar modules embedded inside, is a key part of Tesla's plan to differentiate itself from other solar energy installers in a tightening market by offering a premium product that is designed to appeal to homeowners who either are building a new home or planning to replace their roof.
Conventional rooftop solar energy systems, in contrast, are only available to homeowners with relatively new roofs, since the panels will last 20 years or longer, making it essential that they not be installed on shingles that are likely to need replacing during that life span. Musk has said the solar roof will provide a new option for the estimated 5 million homeowners who replace their roof each year.
Because homeowners only rarely replace their roof, it will take time for the market for Tesla's solar roof to develop.
"I think, eventually, almost all houses will have a solar roof," Musk said. "The thing is to consider the time scale here, to be probably on the order of 40 or 50 years. So on average, a roof is replaced every 20 to 25 years. But you don't start replacing all roofs immediately," Musk said. "But eventually, if you, say, were to fast-forward to, say, 15 years from now, it will be unusual to have a roof that does not have solar."
The solar roofing market, however, has been challenging. Other companies, including Dow Chemical, have tried to develop and sell solar roofing products, but largely have failed because of poor performance and costly installations.
Tesla, in return for $750 million in state subsidies that built the Buffalo factory and paid for much of the equipment that will go inside it, also has pledged to help bring 1,440 other jobs to Buffalo Niagara through suppliers, vendors and service providers for the factory.
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