Elon Musk’s Tesla Motors Inc. has agreed to buy SolarCity Corp. for $2.6 billion, in an all-stock deal that would double Tesla’s workforce to 30,000 people and, Musk hopes, make it possible for the company to bring solar energy to the masses.
In a joint statement on Monday, Tesla and SolarCity said the deal would form the “world’s only vertically integrated sustainable energy company,” and save $150 million in costs in the firms’ first year as a combined entity, while allowing the solar energy company to make use of Tesla’s 190-store retail network and strong branding.
As Quartz has noted before, combining the two companies could help Musk sell more Tesla batteries for storing solar energy in home installations—which would give him an important advantage in competing with politically powerful utility companies.
“The potential is there for Tesla to be a $1 trillion market cap company, if we play a major role in transitioning the world to a new form of energy generation, and storage and transport,” Musk told investors in June, CNN reported.
He had more to say about the merger in the Tesla “master plan” update he gave in July, where he laid out the goal of creating a “solar-roof-with-battery product” that can deployed with one order, one installation, and one service contact for the customer.
“We can’t do this well if Tesla and SolarCity are different companies,” he wrote. “That they are separate at all, despite similar origins and pursuit of the same overarching goal of sustainable energy, is largely an accident of history. Now that Tesla is ready to scale Powerwall and SolarCity is ready to provide highly differentiated solar, the time has come to bring them together.”
But news of the merger generated some criticism from analysts who suggested that combining the two companies would only amplify their individual losses and could possibly distract from ramping up production at Tesla Motors.
Tesla shares fell 4 cents to $234.75 in midday trading in New York. SolarCity shares were off $1.43, or 5.4%, to $25.27.