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Tesla says solar roof production is rising in Buffalo

Tesla Inc.'s solar energy business remained sluggish during the spring, but the company said it is "steadily ramping" production of its solar roofing panels in Buffalo and expects to further increase output at the RiverBend plant toward the end of the year.

Tesla CEO Elon Musk said during a conference call Wednesday that the company had installed the solar roof on several hundred homes and still was doing testing on its durability and working with first responders on safety.

“We also expect to ramp that up next year at Gigafactory 2 in Buffalo,” Musk said.

The solar roofing tiles, which are designed to look like a conventional roof but have solar cells inside, will be Tesla's main product at the Buffalo gigafactory. The plant now employs more than 600 workers, although the majority of them work for Panasonic, which has more than 300 employees making solar panels and cells, with plans to hire 80 more workers.

Tesla said in a letter to shareholders on Wednesday that it still is working on the product design and production process for the solar roof, based on what it has learned from its initial factory production and the first installations on the roofs of homes owned by company executives and, more recently, a smattering of customers.

Tesla, which reported a larger-than-expected loss during the second quarter, is "gaining valuable feedback from each new installation,"  Musk and Deepak Ahuja, Tesla's chief financial officer, said in the letter to shareholders.

"We plan to ramp production more toward the end of 2018 and are working hard to simplify the production and installation process before deploying significant capital into factory automation," the executives wrote.

For now, Tesla is continuing to keep a lid on its solar energy installations after dropping door-to-door sales and scrapping an agreement to sell rooftop solar systems at Home Depot stores.

Tesla's installations during the second quarter rose by 11 percent from the four-year low set during the first quarter, but the 84 megawatts of solar energy generating capacity that the company deployed this spring were less than half of the 176 megawatts it deployed during the second 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 major shift in the company's sales strategy that puts more of a focus on cash sales to consumers, rather than the no-money-down leasing models that SolarCity used. Cash and loan sales accounted for 68 percent of Tesla's residential deployments during the second quarter, up from 37 percent a year ago.

While Tesla’s solar energy business has shrunk markedly, the company said its moves have helped the solar energy business generate as much cash as it uses, 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 be profitable during the third and fourth quarters as production of its Model 3 electric sedan continues to rise. It hit the 5,000 vehicle per week benchmark it needs to be profitable during several weeks in July, and Tesla said it expects to produce 50,000 to 55,000 Model 3s during the third quarter.

Tesla reported a loss of $717.5 million, or $4.22 per share, compared with a loss of $336.4 million, or $2.04 per share, a year earlier. Excluding one-time items, Tesla reported a loss of $3.06 per share, which was worse than the loss of $2.91 per share that analysts expected.

But Tesla's revenues, which rose to $4 billion from $2.79 billion, were stronger than analyst forecasts.

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