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Making a solar roof is 'quite a hard problem,' Tesla's Elon Musk says

It's been nearly three years since Elon Musk unveiled Tesla's solar roof at a Hollywood event, and he still thinks it could turn into something big.

But getting there hasn't been easy – and Tesla still is working on the roof's design, leading to repeated delays in ramping up production at the company's Buffalo factory that will make the innovative solar roof.

Still, Musk told Tesla's shareholders on Tuesday evening that the company is about to complete work on the third version of its solar roof, which is designed to look like a conventional roof but with solar cells inside to generate electricity.

"It’s quite a hard problem, and then making it easy to install , getting the cost low," Musk said.

Tesla is counting on the solar roof to be a hit with consumers who want to generate their own electricity but don't like the look of conventional solar panels attached to their roof.

But developing the solar roof has been a prolonged process. Musk told investors two years ago that the company had installed solar roofs on a portion of his California home and that of JT Straubel, Tesla's chief technology officer, as part of the testing process. The company also started taking online reservations for the roof.

Yet Tesla has installed relatively few of the roofs for consumers. And Musk revealed during a conference call with investors this spring that the company was working on the third version of the roof, after having never disclosed that that there were two previous iterations of the product.

"This is actually quite a hard technology problem to have an integrated solar panel or solar cell with a roof tile and have it look good and last for 30 years," Musk said. "It is a hard problem to solve. Many other companies have tried to solve this problem and they have not succeeded, but I feel very good about it."

Because Tesla is offering a 30-year warranty on the roof, the company has to do extensive testing in a much shorter period of time to measure how the new product will stand up to varying weather conditions.

"Roofs have to last a long time," Musk said.  "We just did six months of testing and then project it out for 30 years."

Musk, however, said he thinks it's possible that owning the latest version of Tesla's solar roof – despite upfront costs that are double or triple the cost of a conventional roof – could wind up being cheaper for homeowners once the savings on electricity bills are factored in over the life of the roof.

"I’m quite excited about version three of the solar roof," he said.

"I’m going to be overconfident on this, but I think we have a shot on being equal to a conventional roof, plus someone’s utility costs, or being maybe lower than that," he said.

"That’s like one of the cheapest roofs available. So you can have a great roof with better economics than a normal, fairly cheap roof and your utility bill," he said. "If  you have a better product at a lower price, that is obviously, will take off like crazy."

Musk's comments come as Tesla is taking steps to broaden the products it makes at the Buffalo factory beyond solar energy to include electrical components for its batteries and its electric vehicle charging stations.

Those products are a way of bringing more work and a more diverse product line to the Buffalo factory at a time when its solar energy business is slumping and 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 last month that 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 up and running and the company plans to install additional lines 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.

Tesla has promised to create 1,460 jobs at the Buffalo factory by April 2020 or else it could be hit with a $41.2 million penalty. The plant had 730 workers in mid-April, according to a report filed with state officials last month. That topped Tesla's promise to have 500 jobs by April at the Buffalo plant.

Tesla's solar energy business also has been shrinking rapidly. The company's first-quarter solar installations plunged by 38 percent from a year ago and are at their lowest level in more than five years. Tesla has dropped door-to-door sales and ended a sales relationship with Home Depot in a cost-cutting move, while funneling potential customers online or to its electric vehicle stores.

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