Elon Musk’s two companies, Electric carmaker Tesla and rooftop solar installer SolarCity now unites as one firm on a merger term. An announcement on Monday revealed that both the firms had agreed to a $2.6 billion merger. The merged firm will now produce solar panels, Powerwall batteries that store the energy and fuel free electric cars that run on these batteries. The merger embodies the Musk’s plan for “end-to-end clean energy” solution stated two weeks ago in his “Master Plan part Deux.”
In a joint statement both the companies stated that the “Solar and storage are at their best when they’re combined.” Tesla Motors original deal to purchase SolarCity was announced earlier in the month of June. CEO of Tesla and Chairman of SolarCity, Elon Musk who is also cousins with the SolarCity’s CEO-Lyndon Rive said that the deal would create a “stronger balance sheet,” for both the firms.
The $2.6 billion merger is an all-stock deal in which SolarCity shareholders will get 0.11 share of Tesla for each of their SolarCity share. SolarCity share is valued at $25.83 according to the closing prices on Friday. If all the shareholders approve the deal, the workforce of Tesla company will be doubled to about 30, 000 employees.
Tesla which has a market capitalization of $34.6 billion and SolarCity which has the market cap of $2.6 billion said after the deal closes, they could collectively receive the benefits of $150 million in cost synergies in the first year.
“This is really all part of solving the sustainable energy problem,” stated Musk on a conference call Monday. “That’s why we’re all doing this, is to try to accelerate the advent of a sustainable energy world, and I think this is an important step in that direction.”
“It’s going to be very clear that this combination of solar combined with storage will be able to provide energy at a lower cost than traditional forms of energy,” Lyndon Rive said during the call.
“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.
Elon Musk said that the merged company could offer a single source of hardware for a low carbon lifestyle to its customers. He said that it could reach customers, installing roof solar panels, sending power to Tesla storage batteries in their homes, and Tesla cars in their garages.
Well, this deal of merger is likely to cut down the losses that both the companies are facing individually. By elevating the production of electric cars and self-driving cars, Tesla is looking forward to become the largest automaker. Reportedly, the company is also interested in ride-sharing services.