Editor Notes : “Tesla has reached an agreement to buy solar power outfit SolarCity for US$2.6 billion, as it had announced was its intention back in June. The companies already have close links and the recently unveiled Part Deux of Tesla’s Master Plan had further indicated a desire for greater integration.”

    The deal is based on Tesla's (makers of the Powerwall seen here) assertion that "solar and...

    By Stu Robarts,

    Tesla says the deal will create the world’s only vertically integrated sustainable energy company. It is based on the firm’s assertion that “solar and storage are at their best when they’re combined,” which, in practice, means combining SolarCity’s solar power products with Tesla’s Powerwall and Powerpack electricity storage products.

    Although Tesla and SolarCity have already worked closely together, it is expected that the merger will allow them to achieve cost synergies of $150 million in the first full year after the completion of the deal. Customers are also expected to see direct savings on hardware and installation costs, as well as to save more indirectly as a result of manufacturing efficiencies and reduced customer acquisition costs.

    Once combined, the companies aim is to produce “residential, commercial and grid-scale products that improve the way that energy is generated, stored and consumed.” Tesla sees this manifested as a “one-stop solar and storage experience” that will required only one installation, one service contract and one app.

    The deal is expected to be completed in the fourth quarter this year, with shareholders of both companies needing to approve it first, as well as regulatory approval being required and other closing conditions needing to be met.

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