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Tesla says it has started solar roof installations for employees — but demand is unclear (TSLA)

Tesla said in a second-quarter investor letter that it will begin full production for solar roof products at its new Buffalo plant before the year ends.

Tesla CEO Elon Musk holds the company's tuscan solar roof tile.

With so much fanfare surrounding Tesla's long-awaited Model 3 launch, news of the company's solar roof has fallen by the wayside.

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Tesla's second-quarter investor letter provided some clarity to the state of CEO Elon Musk's recent foray into the solar business. Tesla said it has successfully completed solar roof installations on employees' homes, the company said in its letter.

Tesla started accepting orders in May for two of its four solar roof tile options.

What's worth taking note of is what the letter neglects to say. Tesla did not say how many non-Tesla employees ordered its solar roof, making it difficult to assess demand.

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Tesla is currently building pilot solar roof products at its factory in Fremont, California. It will begin production at its factory in Buffalo, New York before the end of the year.

Tesla acquired SolarCity in November in a deal worth $2.1 billion. As part of the acquisition, Tesla is continuing to install traditional solar panels while attempting to sell its own solar roof product. The solar roof is meant to compete on aesthetics by resembling slate, tuscan, and glass tiles.

Tesla said "energy generation deployments," or solar products, have declined from the second quarter of last year "as we continue to focus on more profitable projects that generate positive cash flow." Energy storage deployments, which would encompass the Powerwall and Powerpack, have increased in that same time frame.

The company added that residential solar deployment will be affected in the short term as Tesla has stopped offering solar through door-to-door sales. It is instead selling the products in Tesla stores.

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The state of New York is spending $750 million on the Buffalo solar plant as part of an economic revitalization project called the Buffalo Billion initiative spearheaded by New York Governor Andrew Cuomo. SolarCity had pledged $150 million toward the plant, which Tesla is now calling Gigafactory 2.

Peter and Lyndon Rive, the brothers who cofounded SolarCity, left Tesla a few months after the acquisition. The Rives are Musk's cousins.

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