Tesla has made a £1.9 billion acquisition bid for SolarCity in a “no brainer” deal to integrate solar power into Tesla’s business strategy
Elon Musk’s Tesla has made an offer to acquire solar energy company SolarCity for $2.8 billion (£1.9bn).
Musk, who is already the chairman of SolarCity and the major shareholder in both companies, called the deal a “no-brainer” because of Tesla’s business in batteries for both electric cars and homes.
“Culturally, this is a great fit. Both companies are driven by a mission of sustainability, innovation, and overcoming any challenges that stand in the way of progress,” said Tesla on Tuesday.
Musk’s cousins Lyndon Rive and Peter Rive are CEO and CTO of SolarCity, respectively.
While Tesla has success in selling its cars, Musk has been under increasing pressure to turn a profit on Tesla, and that can profit could easily be found in selling renewable energy. An acquisition of SolarCity could also bring down the costs of Tesla’s manufacturing business in the long-term.
Tesla reported $1.6 billion (£1.1bn) in revenue for its first quarter ending March 31, and raised capital spending this year by 50 percent to $1.5 billion (£1bn).
If the acquisition is successful, Tesla said it would be the world’s only vertical integrated energy company offering end-to-end clean energy products to its customers, from cars, to solar panel systems, to home batteries, which Tesla calls ‘Powerwalls’, launched in 2015.
“We would be able to provide the best possible installation service for all of our clean energy products. SolarCity is the best at installing solar panel systems, and that expertise translates seamlessly to the installation of Powerwalls and charging systems for Tesla vehicles,” said Tesla.
While the relationship between Tesla and SolarCity is already close, Tesla said that a combined company would be able to expand its addressable market further than either company could so separately.
“Because of the shared ideals of the companies and our customers, those who are interested in buying Tesla vehicles or Powerwalls are naturally interested in going solar, and the reverse is true as well. When brought together by the high foot traffic that is drawn to Tesla’s stores, everyone should benefit,” said Tesla.
The company is holding a call to further discuss the bid today.