Tesla Motors and SolarCity have joined forces to become the ‘world’s only vertically integrated sustainable energy company’.
The $2.6 billion bid was first announced in late June, but drew scepticism over the motives of Tesla CEO Elon Musk, who is also chairman of SolarCity, as well as a major shareholder. Some analysts also questioned whether the deal would divert Tesla’s attention from an ambitious plan to significantly expand electric-car production in the next few years.
Tesla CEO Elon Musk is a major shareholder of both Tesla and SolarCity, which is led by his cousins. And together, the plan to sell solar panels, residential and commercial battery storage systems and electric vehicles under one brand.
Through this merge, Musk expects to achieve cost synergies of $150 million in the first full year following the final close on the acquisition. As part of the agreement, SolarCity is entitled to a 45-day ‘go-shop’, which allows then to solicit other offers from now until September 14, 2016.
But Tesla is confident that their deal will stand on the table and expects ‘the transaction to close in the fourth quarter’ of this year. If the deal is approved, this move will double Tesla’s workforce to nearly 30,000 employees.
This family union might have great potential, but critics are already concerned that its starting out with financial problems.
But Tesla said the buyout would enable it to achieve lower hardware costs and boost manufacturing efficiency, creating the ‘world’s only vertically integrated sustainable energy company.’