Tesla adds solar to its portfolio through SolarCity acquisition
In what Elon Musk termed a "no-brainer," Tesla Motors has made an offer to acquire solar panel installer SolarCity.
Wayne CunninghamManaging Editor / Roadshow
Wayne Cunningham reviews cars and writes about automotive technology for CNET's Roadshow. Prior to the automotive beat, he covered spyware, Web building technologies, and computer hardware. He began covering technology and the Web in 1994 as an editor of The Net magazine.
Tesla Motors announced its intention to acquire solar panel installer SolarCity today, in what Tesla CEO Elon Musk described as a "no-brainer" deal. If the acquisition goes through, Tesla would add solar panel installation services to its current business lines selling electric cars and battery storage devices.
It might seem like a "no-brainer" to Musk, but his investors must be wondering where the brains are. In after-hours trading on Tuesday, stockholders pushed the stock down more than 13 percent to $190, a loss of $29.61 since the announcement.
Tesla currently sells the Model S and Model X electric cars, and recently announced the Model 3. Last year, Tesla introduced its Powerwall residential battery storage system, at the time noting that it worked best in conjunction with solar panels.
Ties between the two companies are extensive. Not only are they neighbors in the San Francisco Bay Area, Elon Musk is also Chairman of the board for SolarCity.
On a call about the offering, Musk said that SolarCity services would be branded under Tesla, and available in its stores. Customers would be able to buy a car, a home charger and Powerwall battery pack and arrange for installation of solar panels to help generate electricity. He noted that the Powerwall battery packs and SolarCity solar panel installations both require a data connection, which could be consolidated in future installations.
When asked about timing of the acquisition during the press call, Musk said that the boards of Tesla Motors and SolarCity will need to go through due diligence investigation. Once they make a recommendation, the acquisition will be up to a shareholder vote. Musk said he would take himself out of that process, which will avoid bias.
The acquisition will be conducted entirely through a stock transfer. At the timing of the acquisition announcement, Tesla shares (TSLA) stood at $219.61, and SolarCity shares (SCTY) were $21.19.
Watch this: Tesla diversifies its product line with home battery back-up