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Tesla says Buffalo solar production to 'accelerate significantly' in 2018

Tesla Inc.’s solar energy business continued to shrink during the first quarter, although it expects production of its new solar roofing panels at its Buffalo gigafactory to “accelerate significantly” during the second half of the year.

Tesla, which began holding hiring events in Buffalo last month to start building the workforce at its RiverBend factory, offered no specifics about production levels at the South Park Avenue plant or how many people the company employs there. Tesla previously has said total employment now exceeds 500 people, but most of that is from its partner, Panasonic, which has more than 300 workers producing solar panels and modules at the RiverBend factory.

The Buffalo plant’s main product will be Tesla’s solar roofing tiles, which are designed to look like a conventional roof but have solar cells inside. Tesla said in a letter to shareholders released Wednesday that it is “working to enhance the product design and manufacturing process, in order to improve the customer experience while reducing manufacturing cost and achieving high levels of quality.”

The company said solar roof production “should accelerate significantly” during the second half of this year.

For now, though, Tesla, coming off a smaller-than-expected loss during the first quarter, said it continued to keep a lid on its solar energy installations in the first three months of the year after dropping door-to-door sales and focusing on installations that will generate more cash for the company.

Tesla’s installations dropped to their lowest level in more than four years during the first quarter, with the company installing 76 megawatts of solar energy generating capacity – a little more than half of the 150 megawatts of generating capacity it installed during the first quarter of last year.

Tesla said the decline, which has been going on ever since the company acquired SolarCity in November 2016, is part of a “strategic decision” to move away from door-to-door sales, de-emphasize less profitable commercial solar projects and put more of a focus on cash sales to consumers, rather than the no-money-down leasing models that SolarCity used.

Tesla also said some solar energy customers are waiting to install solar panels until they can pair them with a Powerwall battery to store the excess power generated during the day so it can be used at night or when it’s cloudy.

While Tesla’s solar energy business has shrunk markedly, the company said its moves have helped the energy generation business have a positive cash flow, rather than being a cash drain on the company at a time when it is focusing most of its resources on ramping up production of the Model 3 electric sedan that is at the center of its plan to stem years of losses and become profitable.

Tesla said it expects to generate cash during the second half of the year as production of its Model 3 electric sedan ramps up. It expects to reach the 5,000 vehicle per week mark it needs to be profitable in about two months. Tesla reported a loss of $3.35 a share on $3.4 billion in sales. Both topped analyst forecasts.

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