Elon Musk’s electric car company Tesla has offered to buy SolarCity in a deal valued at $2.5 to $3 billion, a bid that would position the combined company to become a vertically integrated clean energy giant, the company said Tuesday.
SolarCity is the biggest residential solar installer in the U.S., and its solar panels could feed Tesla automobiles, guaranteeing that they run on clean energy. Both companies have developed battery technology that will be essential to both the continued spread of both residential solar and electric vehicles, by allowing homeowners to capture excess solar power for use during the night or cloudy days. “Tesla’s mission has always been tied to sustainability,” Tesla said in a post on the company website. “It’s now time to complete the picture.”
Read More: Residential Solar Power Faces Serious Growing Pains
Even before Tuesday’s offer the two companies have been tightly intertwined with overlapping leadership and visions. Billionaire Elon Musk serves as the CEO of Tesla and chair of SolarCity’s board. Lyndon Rive, the CEO of SolarCity, is Musk’s cousin. Venture capitalist Antonio Gracias also sits on the board of both. Tesla said that both Musk and Gracias have recused themselves from voting on the bid on both boards.
Read More: Your Utility Company Wants to Sell You More than Just Electricity
The bid came as SolarCity stock is trading at less than half the price from a year ago, following fears that regulators might eliminate the tax credits and rebates that help make solar power a viable financial option for homeowners. (SolarCity stock prices rose substantially in after hours trading following the announcement, while Tesla’s declined.) Currently utility companies in many states are required to purchase the excess energy produced by residential solar panels for the same price that utilities sell electricity to customers—a key financial benefit. Nevada—a major state for solar providers—changed its policy in December, and other states are considering whether to make similar changes, a shift that could cripple the rapidly growing U.S. solar industry.
“If all the regulators in all the states take a hard attitude toward net metering, they will kill the solar industry,” Jenny Chase, a solar-industry analyst at Bloomberg New Energy Finance (BNEF) said earlier this year. But she added, “I think most of the time the regulators will be under pressure to resist the utilities.”
Read More: Why Your Electricity Will Be Greener in 2016
Musk has previously shown himself more than willing to employ unconventional methods to support his businesses in the face of financial challenges. A Wall Street Journal report from earlier this year documented how Musk used SpaceX—another company Musk leads—to buy millions of dollars of bonds in SolarCity when the energy company needed capital. Musk also has taken out $475 million in personal credit lines and purchased shares of SolarCity and Tesla to provide capital, according to WSJ.
On the other hand, Tesla’s multiple electric car models have been met with enthusiasm—both by Wall Street and consumers. Its stock prices have soared as more than 400,000 people committed to purchasing the company’s $35,000 Model 3 when it is scheduled to ship at the end in 2017.
- Donald Trump Was Just Indicted. Here's What to Know About the Charges and the Case
- What Could Happen Next for Donald Trump
- Trump's Indictment Drama Showcased His Rivals' Weakness
- Inside Ukraine's Push to Try Putin For War Crimes
- Bad Bunny's Next Move
- Elon Musk Signs Open Letter Urging AI Labs to Pump the Brakes
- Eliezer Yudkowsky: Pausing AI Developments Isn't Enough. We Need to Shut it All Down
- 'How Is This Still Happening?' A Survivor Questions America's Gun Violence Problem
- Cheryl Strayed Will Always Be Here for You
- Who Should Be on the 2023 TIME100? Vote Now