Tesla Inc. has seven months to recover from the setback the Covid-19 pandemic – and the slow development of its solar roof – delivered to its taxpayer-funded South Buffalo factory.
The company has more than 1,000 jobs in Buffalo – nearly 500 jobs short of meeting its job promises at the Buffalo factory that was the centerpiece of the state's Buffalo Billion economic development program, state officials said.
But the company also told the state that it expects to meet or exceed its promise to bring 1,460 workers to its sprawling factory on South Park Avenue by the end of the year.
The company in April was granted an extension through the end of December to meet its job promise in Buffalo, which has been pushed back by nearly two years because of the economic upheaval caused by the Covid-19 pandemic.
If Tesla doesn't hit that job target, the state, which spent more than $950 million to build and equip the plant, must decide whether to impose a $41.3 million penalty on the company.
"We are encouraged by the progress the company has continued to make despite the overwhelming economic challenges created by the pandemic," Empire State Development said in a statement.
Tesla employs more than 1,600 people statewide, which includes jobs at the Buffalo factory, as well as at the handful of electric vehicle stores that it operates, primarily downstate. The state said Tesla has spent more than $800 million on its New York operations – a figure that includes payroll.
The development of the Buffalo factory has been slower than state officials hoped when they first backed a solar panel startup, Silevo, to build a solar panel factory at RiverBend.
The plans expanded after SolarCity bought Silevo and then morphed again after SolarCity fell into dire financial straits and was purchased by Tesla. Instead of making solar panels, Tesla shifted its focus to a solar roof product that it was developing.
But producing the solar roof in volume has taken far longer than Tesla CEO Elon Musk expected. Musk admitted last month that Tesla made "significant mistakes" that underestimated how difficult its Solarglass roof would be to install on unconventional roofs.
It raised the price of the solar roof sharply to reflect those installation issues. It’s now requiring that homeowners installing a solar roof – or even conventional solar panels – to also put in a battery storage system using one of Tesla’s Powerwall batteries to make installations simpler and make the home much less dependent on utility-generated electricity.
But those stumbles mean that Tesla still isn't installing the solar roof in volume – the company has never disclosed how many Solarglass roofs it has installed – and that limits demand for what is supposed to be the main product made at the Buffalo gigafactory.
To fill out the Buffalo factory and help it meet its job target, Tesla has shifted electronics assembly work here and, earlier this year, asked local politicians to help promote job opportunities for high school-level data annotation specialist jobs tied to its self-driving vehicle initiatives.
“Production has gone fine, but we are choked at the installation point,” Musk said during a conference call last month. “Despite raising the price, the demand is still significantly in excess of our ability to meet the demand to install the solar roofs.”
Tesla said in February 2020 that its workforce in Buffalo had exceeded the 1,500 mark, including Tesla employees and contract workers.
Then Covid hit and the plant closed temporarily. While it reopened once last spring's lockdown was lifted, the company last month said operations at the Buffalo factory "have not yet fully ramped due to a number of factors related to the pandemic."
The state granted Tesla a one-year extension on its job target last year, after the onset of the Covid-19 pandemic, that pushed its deadline for meeting its employment target into May.
The state agreed in May to another extension that pushed the deadline to the end of December 2021 as part of a leniency initiative that applies to all companies facing job creation deadlines with the state.
The extension does not shorten Tesla's 10-year job commitment for the South Buffalo factory. Instead, it pushes out the job creation schedule included in its agreement with the state. Tesla asked for the extension.