Tesla and SolarCity leapt an important hurdle Thursday: getting shareholder sign off for the proposed acquisition of the latter by the former. Respective shareholder votes at both companies signaled a green light for Tesla’s plan to take over the solar energy technology provider, which Elon Musk first proposed in June. Even minus Musk and “other affiliated shareholders,” Tesla shareholders voted 85 percent in favor of the deal, and Tesla expects the transaction to close “in the coming days.”
Sign-off from shareholders was essentially the last big barrier to the deal, which aims to bring together a company Elon Musk leads as CEO with one founded by his cousins where he acts as Chairman of the Board. Already, Tesla has been treating the companies as essentially unified, with an event last month that highlighted a new glass solar tile that was co-presented by Tesla and SolarCity execs, but treated mostly as though it were the product of a single, encompassing Tesla.
In addition to the event, which included a reveal of the solar tiles along with Tesla’s new and improved Powerwall 2 home energy storage solution, Tesla put out a blog post at the beginning of November articulating the reasoning behind the combination of the two companies. Basically, as Musk has repeated many times, Tesla’s interest is in building an “integrated sustainable energy company,” which covers every step from energy creation, to storage and ultimately to consumption and transportation, too.
Tesla also expects SolarCity to actually contribute positively to its cash balance, adding over $500 million to Tesla’s balance sheet across the next three years. Meanwhile, it says Tesla itself is in its best financial shape ever, putting it in a good position to execute on the acquisition.
The tie-up between the two company’s is driven by a vision Musk maintains of a unified sustainable energy stack, and Tesla also sees it as an opportunity to promote adoption of SolarCity’s products more broadly via Tesla’s existing global relationships with loan providers, which can help finance installation of new consumer solar setups, in more places than SolarCity currently operates.
Musk also anticipates a future where the market for the Powerwall and other home storage batteries far outstrips demand for Tesla vehicles, including in areas that are underserved or hard to reach for traditional grid-based power providers. A side benefit of the union could be cross-over “halo” brand effect for both companies, where satisfied customers of one become new clients for the other.