Tesla’s solar business slumps as supply shortages take a toll | Business Local

Tesla’s solar business slumps as supply shortages take a toll | Business Local

The supply chain crunch hit Tesla Inc.’s solar energy business hard this winter.

The company’s solar energy deployments – including the solar roof made at Tesla’s Buffalo plant – plunged by nearly half during the first quarter because of problems getting supplies from outside the United States.

Tesla said it installed 48 megawatts of solar energy generating capacity during the first three months of this year, 48% less than the 92 megawatts of solar capacity it installed during the same period last year.

Tesla blamed supply chain issues for the drop.

“This reduction was caused by import delays beyond our control on certain solar components,” the company said in a letter to shareholders as it reported profits and sales that topped analyst forecasts.

“Challenges around supply chain have remained persistent, and our team has been navigating through them for over a year. In addition to chip shortages, recent Covid-19 outbreaks have been weighing on our supply chain and factory operations,” the company said in a statement.

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Tesla CEO Elon Musk said he expects the supply shortages that affected the company’s battery and solar energy businesses to be resolved.

“I expect batteries and solar to grow well this year,” Musk said during a conference call Wednesday.

Tesla said sales of its solar roof – one of the primary products made at the company’s Buffalo plant – also increased, although it provided no details.

Analysts believe Tesla has installed a relatively small number of solar roofs, so even a high percentage increase likely involves a modest number of additional deployments.

Tesla’s solar roof is complex, and that has slowed the development of the roofing system and its rollout. Tesla CEO Elon Musk admitted last spring that the company made “significant mistakes” that underestimated how difficult the new roofing product would be to install on some roofs.

Installing the solar tiles is complicated even on a regular, square roof, with the extra circuitry and engineering that the solar roof requires. But that process is even more difficult when installers have to work around odd angles and other nooks and crannies that a roof may have.

The supply chain issues are another complicating factor in the efforts to increase sales of the solar roof.

So is the growing competition in the solar roofing market. GAF Energy has launched a line of solar shingles that provide homeowners with a built-in solar power array, as does Tesla’s solar roof, but in a simpler format that can be installed by roofers, rather than the specially trained teams used by Tesla. GAF Energy says its roof costs about the same as a traditional roof with rooftop solar panels installed on it.

Tesla said earlier this year that it has 1,619 full-time and 17 part-time employees at the Buffalo factory, comfortably topping the 1,460 jobs that Tesla needed to avoid a $41.2 million penalty from the state, which spent $950 million to build and partially equip the plant.

To reach its job target, the company has been shifting other types of work to the Buffalo plant.

The company makes electronic components for its electric vehicle Superchargers and inverters for some of its battery products in Buffalo. It also has hired hundreds of people to work on its autonomous driving programs for electric vehicles, although many of those positions are for data annotation work that only requires a high school diploma.