Not all black squirrels are actually black!

There are actually 3 types of “grey” squirrel: grey, brown-black and jet black.

Grey squirrels have inherited a normal pigment gene from both parents.  Their genotype is E⁺E⁺.                           Brown-black squirrels have inherited one normal gene from one parent and one with a chunk missing from the other parent. Their genotype is E⁺E^B.

Jet black squirrels have inherited a gene with a chunk missing from both parents. Their genotype is E^B E^B.

What happens when you cross and grey squirrel with a black squirrel?
When a grey squirrel mates with a jet black squirrel, all the offspring must be brown-black. This is because the grey squirrel can only give a E⁺ gene and the jet black can only give a  E^B gene.

Take a closer look at squirrel fur
 

When you look closely you can see that the fur of grey squirrels is actually stripy.

Special cells at the root of the hair put tiny blobs of pigment into hair as it grows.

When the hair is first growing no pigment is put in, so the tips of the hairs are white. When the hair has been growing for a few days blobs of dark pigment are put into the hair. This gives it a black stripe. After a few more days of growth the cells stop making dark pigment and start to make an orange pigment which is put into the hair. The final result is a stripy hair. These stripy hairs are very common in many species including cats and dogs.

The piece of DNA missing in the black squirrel means that they can only make black hairs.