While the year should double the Buffalo workforce, Tesla faces a daunting task – The Buffalo News



When Elon Musk made a surprise visit to Buffalo last week to check Tesla Inc.'s solar panel factor built by taxpayers, he came and went quietly.

Musk did not just talk to the media, but he did not meet anyone from New York State who spent $ 750 million to build the huge plant and pay for a lot of his equipment.

Governor Andrew M. Cuomo, who has made the Tesla plant the centerpiece of his $ 1 billion Buffalo economic development program, does not consider it a waste.

Cuomo pointed out that the 700 current employees of the factory, between Tesla and his partner Panasonic, place it well ahead of his promise to employ 500 people in the factory by April 2019 But there is still a long way to go to reach its next goal in terms of employment. : Employ 1,460 people at the plant by April 2020.

"I talk to Elon Musk about several projects on different topics," Cuomo said at a stopover in Buffalo on Wednesday. "We have a lot of things that we do together, it's not that great."

Even in a partnership where the state has invested 750 million dollars?

"I do not know if it's really a partnership," replied Cuomo. "But we incite many companies, they do not call me when they arrive in town, they only call me when there is a problem."

But there may be brewing problems at the Buffalo plant.

To achieve the employment goal set for April 2020, Tesla and Panasonic will have to double the workforce of the factory. If it does not meet its annual employment targets, Tesla could be fined $ 41.2 million by the state for each year below its goals. . If this materializes, Cuomo has announced its intention to do so as well.

Achieving the goal of 1,460 jobs will be a daunting task, especially when Tesla's solar energy sector contracts and does not grow – and that innovative solar roof that should be the main product of Tesla in Buffalo should not be ready for big volumes. production until the end of this year. Tesla has already pushed the deadline several times to increase the production of solar roofs, including twice since last fall.

Musk is still waiting for the solar roof to be a hit with consumers, but it's taking longer than expected to understand how to make it work, test it, and determine how to produce it economically. This is a complex business because the solar roof is designed to look like a traditional roof, with only solar cells inside.

The fact that Tesla is focused on deploying its Model 3 sedan, a less expensive electric vehicle that is key to the company's long-term financial health, has also not helped.

Musk said that he still had high hopes for the solar roof and Cuomo believes it.

"We had the conversation, he gets it, he knows it and no one at any level showed us that there was a problem," Cuomo said. "It's his trust that counts – and our contractual protections – a contract is a contract."

But there are worrying signs. Tesla's solar facilities fell 17%, their lowest level in five years in the fourth quarter. His solar deployments last year were 62% lower than two years ago when he was the undisputed leader in the residential roofing market with a market share of about 33%. Today, Tesla is No. 2 and its market share is about 9%, according to Wood Mackenzie Power & Renewables analysts.

Tesla does not expect the decline of its solar activity to stop immediately. The company announced in January that solar deployments would fall further in the first quarter to another low after 2012.

Tesla has also reduced its rooftop solar sales network. In order to reduce costs by increasing the production of Model 3, the company has stopped selling door-to-door solar for the benefit of online sales and the addition of sunscreen in Tesla stores, hoping that there would be a lot of overlap between buyers customers.

But Tesla now plans to close about half of its 130 stores and demand that all orders be placed online. Tesla said that about 75 percent of his orders for solar home products had already been online, but he did not specify how many of those purchases were due to a visit to a Tesla store or gallery.

An analyst, Ryan Brinkman of JP Morgan, wonders if Tesla's solar roof, which costs two to three times more than a conventional roof, will be the blockbuster that Musk thinks will be the case – at least everything from after.

"The solar roof has fallen behind, especially for product reasons and because the company is so focused on the deployment of Model 3," wrote Brinkman in a research note.

"Tesla is hoping to make progress in 2019," he writes. "Our own estimate is that the solar roof product will likely be a more anticipated niche application than expected, at least in the medium term."

For 750 million dollars, you want a blockbuster, not a "niche app".


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