SolarCity Agrees to Join Tesla for $2.6 Billion
Yesterday (Aug. 1) SolarCity’s board accepted Tesla’s offer to purchase the company for $2.6 billion, making Tesla not just an electric motor and battery company but a more full-fledged energy company. With the purchase of SolarCity it will become a solar panel manufacturer and owner of the largest residential solar installer in country.
Tesla announced it’s bid just over a month ago on June 21 and while it seems like a surprise to some, the companies always have had a shared story. After all, Elon Musk, Tesla founder and CEO, is the chairman of SolarCity’s board and cousin to SolarCity CEO Lyndon Rive. Also, Musk previously noted that his original master plan for Tesla included solar power and the revision of the master plan included: “Create a smoothly integrated and beautiful solar-roof-with-battery product that just works, empowering the individual as their own utility, and then scale that throughout the world.”
“Solar and storage are at their best when they're combined,” Tesla said in a post explaining the transaction. “As one company, Tesla (storage) and SolarCity (solar) can create fully integrated residential, commercial and grid-scale products that improve the way that energy is generated, stored and consumed.”
The company continued, “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,” it stated. “By joining forces, we can operate more efficiently and fully integrate our products, while providing customers with an aesthetically beautiful and simple one-stop solar + storage experience: one installation, one service contract, one phone app.”
While Tesla is producing its Powerwall systems SolarCity also is working to manufacture its own solar panels. It’s currently building out its production facility for its own line of solar panels at its gigafactory in New York.
After the first full year of closing Tesla said it expected to achieve cost synergies of $150 million. “We also expect to save customers money by lowering hardware costs, reducing installation costs, improving our manufacturing efficiency and reducing our customer acquisition costs,” Tesla said. “We will also be able to leverage Tesla's 190-store retail network and international presence to extend our combined reach.”
The sale is expected to be finalized in the fourth quarter of 2016. However, it’s still subject to regulatory and other closing conditions.