Tesla’s solar factory in Buffalo fizzles
Less than a quarter of the plant’s workforce is engaged in solar-related manufacturing, and work stopped completely half of last year. As a result, there’s been none of the promised spin-off development. Story updated to include podcast.
When Gov. Andrew Cuomo announced plans in 2013 for what is now Tesla’s factory in South Buffalo, he pitched it as a cornerstone of the “ clean energy revolution ” and a new high-tech industrial sector for Western New York.
The project would create not only more than 1,400 direct jobs, but spin-off development that would provide a supply chain employing thousands of additional workers. Cuomo proclaimed the project a “game-changer.”
Fast-forward to today. Less than one-quarter of the workforce at the Tesla factory is engaged in solar-related manufacturing. That work was suspended altogether for at least six months last year.
Podcast: Shoemaker discusses how he reported the story and what he found
Employees told Investigative Post that the current solar work takes up less than 20 percent of the plant’s sprawling 1.2 million square feet, built and equipped with 959 million in state tax dollars.
A current Tesla employee told Investigative Post that four years ago “ every person there was solar … 300 to 400 people are probably working solar now.
“It’s a shadow of what it once was.”
Most of the jobs at the Tesla factory these days involve work related to Tesla’s electric vehicles. Many are entry-level desk jobs that require only a high school diploma.
About 500 jobs — nearly one-third of the current workforce of 1,636 — are those entry-level desk positions, in which workers label images from the company’s self-driving vehicle software — merge signs, turning lanes, pedestrians — in an attempt to train the autonomous driving algorithms. The rest of the auto-related jobs involve the assembly of charging equipment for Tesla cars.
“I don’t believe that the solar manufacturing that was promised in New York is being executed as planned or as promised,” said Christoper Stout, a Tesla employee who’s worked at the plant since early 2019 and is currently on leave.
The Tesla plant has not generated any of the anticipated spin-off development. Vast expanses of land around the Tesla plant remains fallow, save for a Tim Horton’s across from the plant’s main entrance.
Behind the Tesla factory, a state development agency owns more than 100 acres of vacant land. Another 50 acres across the street, controlled by assorted private owners, is largely empty. And developer Peter Krog lists an additional 35 acres as up for development just across the Buffalo River.
The state has amended its contract with Tesla no fewer than a dozen times over the years, reducing the number of required manufacturing jobs and loosening the definition of what constitutes that work. A former Empire State Development official confirmed to Investigative Post that the state allowed and encouraged Tesla to use the facility for purposes beyond solar manufacturing.
This story is based on a review of hundreds of pages of court records, 3,000 pages of emails and other documents; interviews with three employees — two current, one former — as well as three solar industry analysts and a former executive with Empire State Development, the development agency that oversees the Tesla project. Tesla and current ESD officials, as well as executives with Panasonic, Tesla’s short-lived partner, refused interview requests.
“I’d say that Buffalo probably could have invested a billion dollars more effectively,” said John Engle. an investor and analyst who has studied Tesla.
Buffalo struggles to produce Solar Roof
In Cuomo’s original conception of the South Buffalo factory, two companies — Silevo and Soraa — would share the space and kickstart a new clean energy sector. Silevo was to manufacture high-efficiency solar cells and Soraa was to produce LED lights. The plan was supposed to net Buffalo 850 jobs for a 225 million state investment.
But plans changed. And the state’s investment skyrocketed.
Between 2014 and 2015, Soraa pulled out of Buffalo, and SolarCity, the solar panel sales and installation company, bought Silevo. Cuomo, at the time, celebrated the pivot as a “landmark investment and economic game-changer.”
The state’s investment, meanwhile, shot up to 750 million in exchange for more jobs, a total of at least 1,460. In theory, SolarCity’s acquisition made sense: Silevo would manufacture solar panels that SolarCity would then sell and install.
Dow’s brilliant idea
There are many reasons Tesla/SolarCity’s solar roof might not catch on, but it’s important to realize that Tesla, a nimble startup fronted by Musk’s megawatt personality, doesn’t have Dow’s problems to worry about.
Dow’s problems began in 2010 — with a treacherously brilliant idea. Company execs looking to cash in on the solar boom had watched the market expand from early adopters to the general public, and, even more enticing, they also knew that asphalt shingles cover four out of five homes in the US. Suddenly it was a no-brainer to integrate small clusters of solar shingles into all of those roofs.
At the time, Jane Palmieri, managing director of solar solutions for Dow, said, We foresee a potential addressable market of 5 billion by 2015.
During Dow’s splashy 2011 launch, CEO Andrew Liveris thought his new solar shingles were a slam dunk, confidently telling reporters that the technology was. a key part of its strategy to invent and innovate.
Unfortunately, Dow’s early decision doomed its project from the start. Since asphalt shingles are the cheapest roofing material on the market, Dow stayed in the same niche by using inexpensive thin-film CIGS [copper indium gallium selenide] cells, which, at the time, were much cheaper than silicon. But there was a catch: CIGS cells were less efficient. So when for silicon modules started dropping, finally falling 80% over the next five years, Dow’s cost advantage was wiped out, and reduced efficiency became a big liability.
Having passed up silicon for a newer technology, Dow also had a hard time scaling up production to reduce costs. Reportedly, output stumbled along at only 400 shingles a day for a long time. Eventually Dow’s customers realized that buying building-integrated solar (BIPV) from Dow amounted to paying a premium for less return, as Greentech Media’s Julian Spector said at the time.
So although owners could take advantage of net metering paybacks facilitated by Dow’s grid-connected inverters, the returns were disappointing.
On top of that, why embed a system when a rack mount makes repairs and solar upgrades so much easier? There’s another advantage: since asphalt roofs absorb a lot of heat and jack up air conditioning bills, rack-mounted solar reduces energy costs by insulating the roof from the sun.
So even though Dow worked hard to increase its shingle’s power density, improve the appearance and speed up production and installation, less than five years after their debut, Liveris had Dow pull the plug and stop the assembly lines.
Elon Musk’s special brand
Dow’s business model backfired too. Conventional silicon-based solar is already complex, but anyone thinking of buying Dow’s new CIGS solar shingles needed even more information, which should have been tied directly to the company’s scientific expertise.
Instead Dow used its normal sales channels and signed deals with builders, who then sold the shingles to homeowners. In a market flooded with solar installers, Dow’s shingles sank to the level of a generic commodity.
As the anti-Dow, nothing Musk does is remotely generic. At his latest rollout, after he introduced Tesla’s elegant solar roofs, he lured new customers with an updated Powerwall 2.
By the end of the presentation, he’d connected electric cars, solar roofs, and storage batteries into an integrated clean-energy company — all built upon Musk’s highly branded one-stop shop, where consumers can ask questions and take test rides as they sort through the technologies.
Bloomberg reported that Musk has said, You have an integrated solar roof with a Powerwall and an electric car, and you just go into a Tesla store, just say yes, it just happens. It all works, it’s seamless and you love it.
Tesla already has hundreds of retail locations around the world, with some getting between 3 and 4 million walk-ins a year. This will significantly reduce SolarCity’s customer acquisition cost, which currently represents almost 450 per watt installed. Recently Tesla has said that by adding a new store every four days this year about 440 stores will open worldwide by the end of 2017.
The electricity is just a bonus
Once the solar gigafactory in New York is working at capacity, Musk thinks the company can get solar cell costs to 40 cents per watt, which is competitive with current commodity solar panels. Unlike Dow’s shingles, the Tesla solar panel is 22% to 24% efficient, which is a big improvement over commodity solar panels converting 10% to 15% of light into electricity.
Perhaps the most surprising Musk factoid is that Tesla’s new solar roof will actually cost less to manufacture and install than a traditional roof — even before savings from the power bill. “Electricity,” Musk said, “is just a bonus.”
Tesla also wants to bring battery packs down to about 100 per kWh by 2020. At that price, a Tesla Powerwall battery could cost as little as 640 to manufacture. With the synergy created by an integrated Tesla/Solar City, the costs of bundling a battery with a typical 25,000 rooftop solar system would be easily absorbed. So it becomes — from Musk’s point of view — a must for Tesla to provide batteries with every new solar installation.
SolarCity announced Tesla had offered to buy it for 5000.6 billion in August 2016.
SolarCity said in an official blog post on August 1, 2016, that Tesla had made an all-stock offer on June 21.
Now is the right time to bring our two companies together: Tesla is getting ready to scale our Powerwall and Powerpack stationary storage products and SolarCity is getting ready to offer next-generation differentiated solar solutions, SolarCity’s blog said.
The deal was approved by Tesla’s shareholders in November 2016. At the time of the acquisition, Elon Musk owned a 22% stake in SolarCity.
When Tesla bought SolarCity, it took on 3 billion in debt.
As Insider’s Matthew DeBord wrote at the time, SolarCity had 3.2 billion in debt when Tesla acquired it. Its market cap had also fallen by 50% in the year leading up to the acquisition.
Elon Musk argued in court he didn’t think SolarCity was financially troubled when Tesla acquired it. However, court documents unsealed in 2019 show Musk emailed former SolarCity finance chief Brad Buss, saying SolarCity would need to solve its liquidity crisis to win over investors.
A regulatory filing showed SolarCity had started 2016 with 15,273 staff but by the end of 2016, it had 12,243.
The Rive brothers left less than a year after the acquisition closed.
Lyndon Rive announced in May 2017 that he would be leaving Tesla in June.
He told employees in a letter he was an entrepreneur at heart, and wanted to leave to build a new startup. Rive told Reuters at the time SolarCity was healthier than it’s ever been.
Peter Rive, Lyndon’s co-founder and CTO, left the company in July 2017. In an internal letter published by Green Tech Media, Rive said he had decided to take a break and FOCUS on some other projects.
I plan to spend more time exploring the outdoors, more time with my family, and helping non-profit solar projects in the developing world, Rive added.
In 2018, Tesla Energy had to deal with a major PR crisis when Tesla solar panels on top of seven Walmarts caught fire.
Walmart filed a lawsuit against Tesla in August 2019 claiming the fires were the result of widespread negligence on Tesla’s part.
After Walmart filed the case Amazon came forward to say solar panels on top of its Redlands, California, warehouse had caught fire in June 2018. The retail giant said it would not be installing any more solar panels.
Walmart dropped the lawsuit three months later after reaching an out-of-court settlement with Tesla, a Walmart spokesperson said. The details of the settlement were not disclosed.
In August 2019, Insider’s Linette Lopez reported Tesla had rolled out a stealth replacement program for faulty solar panels in summer 2018, codenamed Project Titan.
Solar Roof Efficiency vs. Solar Panel Efficiency
The brand new solar roof will be entirely manufactured in the United States. Tesla plans to manufacture all of their solar tiles at their Buffalo facilities using solar cells provided by their partner, Panasonic. Peter Rive, the CTO at SolarCity had previously claimed the efficiency of one of their solar tiles was equivalent to a standard panel. However, according to SolarCity’s website the colored film of the solar tile “allows the cells to blend into the roof while minimizing solar efficiency loss.” While it appears this would mean the efficiency of solar tiles would be lower than those of solar panel, this isn’t necessarily the case.
Currently, Panasonic’s N3300 HIT modules have an efficiency of 19.7%. The have developed solar cells as efficient as 23.5% in their labs. The solar industry average for solar panels is approximately 16%, while Pick My Solar’s installers come in at around 19.5%. So even if the colored film of the solar tiles lessens the efficiency by a few percentage points, the solar tiles efficiency still may be equivalent to that of standard solar modules.
When it comes to the efficiency of Tesla’s solar roof in comparison to standard solar panels, there is no clear cut winner. Just make sure that if your home is very limited in regards to roof space, you go with the highest efficiency module possible to power your home.
How Much Do Tesla Solar Tile’s Weigh?
Per Tesla, their new solar tiles will be approximately half the weight of a standard roof tile. This is a hard claim to make without defining the “standard roof tile” being used in this statement.
To understand the range of tile weights, let’s look at this:
- Concrete Tiles – between 9.5 – 12 lbs. per square foot
- Asphalt Shingles – between 2.5 – 4 lbs. per square foot
- Spanish Tiles – between 6 – 19 lbs. per square foot
- Slate Tiles – between 7-10 lbs. per square foot
Our approximation when taking all of the solar tiles components into consideration is that the tiles will weigh about 15 – 20 lbs. This is a rough estimate due to Tesla’s ambiguity when discussing the weight of their solar tiles.
We reached out to one of our excellent roofing partners, Chandler’s Roofing, to get their perspective on Tesla’s new solar product;
“Aesthetically the Solar Roof is beautiful, but we’ll need to wait and see how Tesla will resolve taking it to market,” says Trevor Leeds, President of Chandler’s Roofing, “Roofing is a different animal than solar. There are different variables that have to be considered like waterproofing and the roof-attachment method. Compliance codes for roofing are also much different than solar. Will Tesla figure out how to be a national roofing contractor? Is Tesla looking to assume this liability and overhead? All of these unknowns will need to be worked out.”
Can the Tesla Solar Roof Work with a Flat Roof?
Unfortunately for homeowners with flat roofs, the Tesla Solar Roof will not be an option for you and your home. The minimum roof pitch eligible for a solar roof installation is 3:12 (or 14 degrees). This puts the Tesla solar roof at a disadvantage considering solar panels can work on all roof types. All it takes for solar panels to be effective on flat roofs is a tilted racking system.
Solar aside, tiling is not recommended for flat roofs due to leaking potential. This is a very real risk considering the wiring components located inside the solar tiles.
Solar Roof Durability vs. Solar Panel Durability
Tesla is extremely confident in the durability of its solar roof. Elon Musk has stated that the Tesla Solar Roof has an “infinity warranty” or for the lifetime of your home, whichever comes first. While the durability of the new solar tiles has not been successfully field testing, there are videos online of the Tesla Solar team launching hail and other heavy objects at the solar tiles to show their durability. Based on a video recorded in a Tesla owned factory, it seems the solar tiles are stronger than a tempered-glass solar panel.
Standard solar panels, however, are usually warrantied by the manufacturer for 25 years and the panels typically will last longer than the warranty. The expected lifetime of solar panels has also been field tested, unlike the solar roof.
The biggest question here is what is going to happen when solar tiles start degrading and losing their efficiency? When solar panels need to be replaced or corrected (which is rare) it is a pretty simple replacement. But what happens when there are solar tile problems? How much of the roof is going to have to be replaced? It seems that making any corrections to a Tesla Solar Roof is going to be very expensive and labor-intensive.
Tesla Unveils Powerwall 2 & Solar Roof
Elon replies
After Lee tweeted about how extraordinary that cost was, Elon Musk responded to him on. agreeing that “The economics are not yet compelling where housing and utility costs are low and property taxes are high.”
But Tesla’s calculator doesn’t quite express the whole story. The trouble with selling roofs is that costs are very location-dependent. For example, Lee’s fears about property tax increases are unfounded because Texas offers a property tax exemption for renewable energy systems added on your property, including photovoltaics (as well as a host of other creative methods of renewable energy generation).
His fears about insurance premium increases might be sound, but it’s hard to tell. Tesla and SolarCity executives said last week that the durability of the roof and its claimed “infinity warranty” might reduce insurance costs for some people. But that’s highly dependent on the insurance company. The more expensive your installation is, the more insurance will have to shell out if your home suffers some kind of sinkhole-type calamity. But if an end-times-scale hailstorm damages your Tesla tiles, the insurance company won’t be the one replacing the tiles—Tesla will.
But even if insurance looks at Tesla’s warranty (which covers power production for 30 years and the tiles themselves for “infinity”) and decides to cut Lee a break, that doesn’t make the raw cost of the solar roof installation any cheaper for him.
Roof compare
If we want to compare an average roof install, we’ll first take a look at no-frills asphalt shingles. (Of course, if this is an aesthetic decision for you, you can spend any amount of money on expensive tiles. Tesla’s non-solar, inert tiles actually cost less than your average non-solar tiles.)
Homewyse sets the average cost of a 30-year warranty, asphalt-shingle roof at somewhere between 3.80 and 6.19 per square foot, including materials, installation, and the price of removing and disposing of the old roof. That puts the cost of the cheapest roof Lee can get somewhere between 14,000 and 23,000. (This price estimate and Tesla’s price estimate both include disposal of the old roof and installation of the new roof.)
The high-end 23,000 sticker price is still far, far below the 99,100 Lee would have to pay for a solar roof. But maybe if we add solar panels, the economics get closer to making sense.
When you first enter your address into Tesla’s roof-cost calculator, it automatically estimates how many solar-to-non-solar tiles you’ll need to cover 100 percent of your energy demand, so we’ll compare that to a solar panel installation of the same size. According to Affordable Solar’s grid-tie estimator, Lee would need a 10.5 kW solar installation to power his home because he uses about 1300kWh of electricity per month on average at a latitude that gets a little over five hours of usable sunlight per day on average. Energy Sage says that, as of 2017, solar panels are costing between 5000.87 and 3.85 per watt (including an inverter and installation). So for a 10,500-watt system, panels would cost Lee between 30,135 and 40,425.
Now, at the high end, a new asphalt roof and solar panels are going to cost roughly 63,000 for Lee and generate the same amount of electricity as a solar roof to offset his energy bills. Since there’s no net metering and Lee doesn’t have any backup batteries to extend the amount of time he can draw from his panels, we’ll compare the utility of this theoretical installation to the “value of energy” number that Tesla’s calculator offers for Lee over 30 years, which is 34,200. We’ll assume the federal tax credit for both solar installations is the same, too: that’s 23,500. (Keep in mind, states like New York and California have additional state-level tax credits that home owners can take advantage of.)
Put the value of energy and the federal tax credit together and you have 57,700 to offset the cost of a more traditional solar panel installation (and remember, these are numbers from the high end of the spectrum). Instead of a solar roof costing Lee 41,400 over 30 years, a new asphalt roof with solar panels will cost him 5,300 over 30 years.
That’s still sort of a raw deal when people in neighboring states are making money off their similarly sized installations.
What about Powerwall?
But Tesla plans to really push people in states without net metering to buy a Powerwall installation. At the time of this writing, if you put Lee’s home address into the Tesla solar roof calculator, it automatically suggests three Powerwalls, which seems like a lot. But if Tesla’s calculations are correct, the economics make sense. For an extra 18,000, Lee would be able to double the amount of energy he can use from either the solar tiles or the solar panels: the “value of energy” over 30 years jumps from 34,200 to 72,800 (although that’s still less than the cost of the roof itself).
With Powerwalls, the cost of installation climbs to 117,100 and the tax credits go up to 28,900. So over 30 years, the installation will still cost him, but only 15,400 rather than 41,400.
But with the asphalt roof, traditional solar panels, and Powerwalls, the cost of installation is now 81,000. The value of energy plus the Texas tax credit comes up to 101,700. So with a more traditional setup plus Powerwalls, Lee makes 20,700 over 30 years, even without net metering. And that’s assuming he never buys a Chevy Bolt or a Nissan Leaf (OK, OK, or a Tesla) and is able to pull fuel costs out of his budget ledger.
People like Lee may be why SolarCity is still selling regular old solar panels: if balancing a Smart budget means more to you than aesthetics and you live in a state without net metering, solar tiles aren’t necessarily going to make the cut.
Even then, 81,000 is a hefty outlay for a normal person. You could fold it into the cost of your mortgage, and that might make sense if you feel that it will add significantly to the worth of your home. But that’s a decision to be made carefully and after several nights, or months of nights, of consideration.
With net metering
Forty-one states in the Union and two utilities outside of those states have some kind of net metering scheme, which is factored into the “value of energy” number that can be found on Tesla’s solar roof calculator. With net metering, the solar roof generally does seem to pay for itself rather quickly.
The Problem With Tesla’s Solar Roof
The two-story, 1,800-square-foot home where I used to live in California, for example, would require a 31,100 solar roof and one 7,000 Powerwall. With residential energy consumption and net metering, I would earn 16,000 over 30 years (if I owned the home and lived in all of it, that is—at the time, we only rented the top floor). I also entered the address of an old house where I once rented a room in Oakland. According to Tesla, that house, with 2,700 square feet of roof, requires a 71,900 roof and a 7,000 battery. But after a 19,200 tax credit, I would earn 43,300 over 30 years (again, if I owned the house, which I don’t).
In other places, a Powerwall detracts from your “net earned” number. I own a small townhouse in Denver and spend about 40 in electricity each month (and much more in gas during the winter). My house is on multiple levels, so I only have about 450 square feet of rooftop to work with. Even though Colorado has net metering, my electricity needs are quite low (and I don’t have a garage in which to park an electric car to squeeze extra electricity out of the system). It’s better for me to sell my excess energy back to the grid during the day than for me to buy a whole Powerwall just to keep my bedside table light on and my iPhone battery charged at night.