Tesla to buy SolarCity

Tesla Motors Inc (TSLA: NASDAQ) will buy sister firm SolarCity Corp (SCTY: NASDAQ), in a deal valued at $2.6 Billion.

Elon Musk is the largest shareholder in both Tesla and SolarCity, and the deal is expected to increase efficiency for Tesla.

SolarCity is prized for their solar panel installations.

Tesla SolarCity acquisition will lower costs: Elon Musk

As reported by Reuters, “Electric vehicle maker Tesla expects to achieve “significant” cost savings and “dramatic improvements” in manufacturing efficiency as a result of the acquisition of solar panel installer SolarCity, Tesla Chief Executive Officer Elon Musk said on Monday.”

Additionally, “Musk said the combined companies will have a “stronger balance sheet,” but likely will require a “small equity capital raise” next year. Both companies have been burning through cash and have projected achieving positive cash flow later this year.”

SolarCity, Tesla stocks down

Both Tesla and SolarCity dropped on the news of the acquisition, as it came in at $200 million less than the previous acquisition offer.

Tesla Model S

The Tesla Model S has recently been involved in a fatal crash, and Tesla is investigating. Brakes, rather than autopilot are suspected.
Tesla Model S: Norsk Elbilforening (Norwegian Electric Vehicle Association) https://creativecommons.org/licenses/by/2.0/deed.en

The SolarCity acquisition comes as Tesla is dealing with the fallout of a fatal Tesla Model S crash. Tesla is eying braking problems as the cause, and not the autopilot as some initially thought.

As reported by the New York Times,

“Tesla Motors has told Senate investigators that its crash-prevention system failed to work properly in a fatal crash, but said its Autopilot technology was not at fault, according to a Senate staff member.

Instead, Tesla told members of the Senate Commerce Committee staff on Thursday that the problem involved the car’s automatic braking system, said the staff member, who spoke on condition of anonymity.”

The Tesla Model S, which retails for $71,200 according to Kelley Blue Book, is one of the most advanced cars on the market, and is an important part of sustaining Tesla’s future growth potential.

Read more about the Tesla Model S and the Tesla SolarCity acquisition