Tesla and SolarCity merge in a $2 Billion Deal

Elon Musk’s Tesla Motors officially moved beyond cars and became a clean-energy company Thursday, as shareholders overwhelmingly approved the acquisition of SolarCity, according to Bloomberg. The deal, valued at about $2 billion, will integrate the maker of all-electric cars and batteries with the installer of rooftop solar panels. More than 85 percent of Tesla shares voted in favor of the merger.

The deal, which sparked controversy over debt and corporate-governance concerns, is a win for Musk’s vision of Tesla as one-stop shopping for consumers eager to become independent of fossil fuels. Now comes the task of integrating two companies that have a track record of fleeting profits and frequent fundraising needs--not to mention thousands of employees. “We’re trying to make an integrated product,“ Musk said during a meeting with Tesla shareholders. “So you have an integrated solar roof with a Powerwall and an electric car, and you just go into a Tesla store, just say yes, it just happens. It all works, it’s seamless and you love it.“

Tesla plans to leverage its formidable brand and retail network with SolarCity’s network of rooftop solar installers and recently announced a “Solar Roof“ product. It’s not clear what role Lyndon Rive, SolarCity’s chief executive officer and Musk’s cousin, will play in the combined company. “With an 85 percent vote, you’re seeing long term shareholders say we’re voting for Elon,“ said Ben Kallo, an analyst with Robert W. Baird. “They’re saying ’We’re not here for the next quarter, we’re here for three or five years.’“

It wasn’t clear when the merger will officially close. SolarCity is expected to cease being a stand-alone brand, as Tesla markets its Powerwall battery for the home as a Tesla Energy Product. “Moving forward I think SolarCity becomes a part of Tesla Energy, but I don’t think that happens overnight,“ said Kallo. Musk owns 21 percent of Tesla and 22 percent of SolarCity, making him the largest shareholder of both companies. He and Antonio Gracias, who also serves as director at both companies, recused themselves from a board vote on the takeover July 30.

The combined company must contend with President-elect Donald Trump, whose views on energy are a sharp departure from President Barack Obama. The real-estate mogul has vowed to roll back environmental regulations and tapped Myron Ebell, a climate-change skeptic, to head his Environmental Protection Agency transition team. The CtW Investment Group, which works with pension funds, called on Tesla to implement corporate governance reforms, urging the company to add more independent directors to its seven-member board.