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Tesla is adding new products in Buffalo as its solar business slumps

Tesla is broadening the products it makes at its Buffalo factory beyond solar panels to include electrical components for its batteries and its electric vehicle charging stations.

The new products are a way of bringing more work and a more diverse product line to the Buffalo factory at a time when Tesla's solar energy business is slumping. The company is less than a year away from a requirement that it essentially double the size of its current workforce or else face a $41.2 million penalty from the state, which built the factory with $750 million in taxpayer funds.

Tesla said it has started making electrical components for the latest version of its electric vehicle Supercharger in Buffalo. The first production line for the Supercharger cabinet is operational, with additional lines scheduled to be installed later this year.

The company also has added several production lines to support making other electrical components that are used in its Powerwall and Powerpack batteries.

"This expanded and diversified product manufacturing further brings the Riverbend facility into the full ecosystem of solar, energy storage, electric vehicle and other Tesla product offerings," said Jonathan Chang, the assistant secretary at Tesla's Silevo subsidiary, in a letter to state officials.

A Tesla spokeswoman declined to elaborate on the scope of the new operations or the number of employees involved in the production of the new products.

The disclosure came as Tesla filed a required report with the state showing that the Buffalo factory had 730 full-time employees at the end of April between Tesla and its partner, Panasonic, which makes solar panels and modules in its portion of the facility. Another 43 people work at the facility as contingent workers, contractors and vendors.

Among those 730 employees, Tesla said it had 329 full-time workers, while Panasonic employed 401, according to the report.

Tesla's solar panel factory in South Buffalo is affected by a big drop in deployments. (Derek Gee/News file photo)

"In addition to scaling production of Solar Roof, Tesla is also diversifying its presence in Buffalo by manufacturing and assembling Supercharger and energy storage components at Gigafactory 2," a Tesla spokeswoman said in a statement. "We’re committed to investing in Buffalo and the state, and the new power electronic lines will deliver more high tech jobs while supporting Tesla’s energy storage products and global Supercharging infrastructure."

Tesla's employment in Buffalo easily topped its target of bringing 500 jobs here by the end of April. But Tesla will have a much harder task meeting its next employment goal, which will require it to roughly double its employment to 1,460 people between itself and Panasonic by the end of April 2020.

"We are pleased that Tesla is reporting that it has exceeded its job and investment commitments, invested $381 million over the course of the project, and become host to nearly 800 full-time employees working at the manufacturing facility," said Pamm Lent, an Empire Development Corp. spokeswoman. "In the coming weeks, ESD will perform the necessary due diligence to verify the data provided by Tesla.”

Doubling the Riverbend factory's employment will be a big challenge at a time when Tesla's solar energy business is shrinking – not growing – and the solar roof product that the company expects to account for much of Tesla's production in Buffalo is still being developed and tested.

Tesla's first-quarter solar installations plunged by 38 percent from a year ago and are at their lowest level in more than five years. Not once since the fall of 2013 had Tesla – or SolarCity before it – installed less than 73 megawatts of solar generating capacity during a single quarter. In the first quarter of this year, it installed just 47 megawatts – less than a third of what it did during the same period just two years ago.

That puts Tesla on pace for less than 200 megawatts of solar installations this year – just a fraction of the 1,000-megawatt production capacity of the Buffalo factory. In response, Tesla late last month said it was slashing the price of its residential rooftop solar systems in a bid to increase sales, while also limiting the sizes of its solar arrays to standardized increments and pushing customers to order online as a way of reducing costs.

With Tesla's solar energy business shrinking, Panasonic has been selling "the great majority" of the solar cells it makes in Buffalo to foreign buyers as a way of avoiding U.S. tariffs on imported solar panels, Reuters reported Wednesday.

Since buying SolarCity in November 2016, Tesla gutted the solar business' sales staff. It dropped door-to-door sales, stopped selling through Home Depot stores and is pushing customers to make solar energy system purchases online as it shrinks its store network.

Tesla also said it plans to open electric vehicle service centers in Buffalo, Rochester and Albany. The company has over 39 Superchargers and more than 1,500 of its Level 2 vehicle charging stations in New York.

Tesla said its total investment in its New York operations was nearly $382 million by the end of April, more than double the $179.3 million required by its deal with state officials. Tesla also is within $90 million of its total investment target of $472 million by the end of April 2020. That investment includes payroll, benefits, inventory, capital spending and other expenses.

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