Tesla and SolarCity plan to merge energy-efficient products for consumers. Solar City, which produces and installs solar panels, and Tesla, which produces battery-powered vehicles, recently engaged in an offer for Tesla to acquire SolarCity.
Tesla seeks to acquire SolarCity’s common stock and give Tesla’s common shares in return. A definite agreement and approval has yet to be reached.
Both companies provide smart technology designed to overcome environmental challenges. Given SolarCity’s background in installing solar panels, Tesla believes it can be applied to installing Powerwalls and vehicle charging devices. SolarCity’s solar panel designs can benefit from Tesla’s engineering and manufacturing background.
Tesla promises a solution to denying fossil fuel resources and engaging in sustainable practices. In theory, both companies would complement each other by having similar goals of achieving sustainability and innovation.
Tesla relies on the assumption that consumers who seek electric vehicles and Powerwalls will want to go solar in their homes and visa versa. Should products be offered within the same vicinity, there is reason to believe both companies will profit accordingly.
While Elon Musk stands behind the offer to combine the companies, which makes perfect sense given his position as the chairman of SolarCity and the chief executive of Tesla, investors are skeptical of the move.
Independent investors will vote on the deal. Although Musk and Antonio Gracias agreed to stay out of board and shareholder votes, the market experienced a loss in Tesla’s shares. Shares decreased by 10 percent leading to Tesla’s market value of $28.7 billion.
Whether Tesla’s claim to become, “the world’s only vertically integrated energy company offering end-to-end clean energy products to our customers” will become a reality will be determined after later stages in the offer process. For the combining of the companies to succeed or to not succeed becomes the next question.