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Tesla wants more time to ramp up solar roof production in Buffalo

It’s going to take longer for Tesla Inc. to increase production of its solar roof in Buffalo.

The electric vehicle maker, which has promised to bring 1,460 jobs to its South Park Avenue solar plant, said Wednesday that it now expects to ramp up production of the solar roof – expected to be Tesla’s main product in Buffalo – during the first half of next year.

That’s later than Tesla’s previous forecast, from as recently as August, that solar roof production would increase later this year.

Tesla blamed the complexity of the solar roof, which looks like a conventional roof but has solar cells inside, and the need to do intensive testing on the new product, for the delay.

“Due to the complexity of solar roof, we continue to iterate on the design of the product via intensive reliability testing and we also continue to refine the installation process,” Tesla said in a letter to shareholders Wednesday as it announced that it had a profitable quarter for only the third time since 2013.

“We expect to ramp production more quickly during the first half of 2019,” the company said in the letter, signed by CEO Elon Musk and Deepak Ahuja, its chief financial officer.

For now, though, Tesla’s rooftop solar business continues to shrink as the company focuses most of its resources on increasing production of its less costly Model 3 sedan, which it views as the key to making its business steadily profitable, with sufficient cash to handle upcoming debt payments and capital spending needs that are likely to reach $2.5 billion next year.

As a result, Tesla has revamped its solar sales strategy, dropping door-to-door and third-party sales at stores such as Home Depot. It also has shifted away from leasing its solar energy systems and now gets 80 percent of its rooftop solar sales from consumers who pay for their installations with either cash or money that they borrowed themselves.

Tesla also said it is prioritizing solar installations that combine solar panels with its Powerwall battery storage systems.

“This combination provides a better customer experience and improves both our revenues and profits,” Musk and Ahuja said in the letter.

Tesla installed 93 megawatts of solar energy generating capacity during the third quarter, down from 17 percent from a year ago, but up 11 percent from the second quarter.

Tesla’s solar deployments are down 42 percent through the first nine months of this year, and are 61 percent lower than they were during the first three quarters of 2016.

Tesla said it now gets most of its solar sales from its own website and its network of 351 stores. That shift has resulted in “significantly lower” customer acquisition costs, which had remained stubbornly high when the solar business was operated by SolarCity before Tesla acquired it in November 2016.

Overall, Tesla said it earned a $312 million profit during the third quarter – a major turnaround from the $718 million loss it reported a year ago – thanks largely to surging sales and production of its Model 3 sedan.

Tesla also ended the quarter with $3 billion in cash, and the company said its cash flow had improved enough that it would be able to make an upcoming $230 million debt repayment – a source of concern to some analysts – without cutting into its cash position.

The profit – and Musk’s prediction that the company would be profitable again during the fourth quarter – was a milestone for Tesla in its efforts to build its production to the point where its sales are sufficient to create a sustainable business.

For that to happen, the Model 3, which sells for $46,000 to $64,000 before federal and state tax incentives, needs to be a hit with consumers and Tesla needs to increase its production to meet the demand.

Tesla made more than 53,000 Model 3 vehicles from July to September, almost double its second-quarter production.

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