Tesla and SolarCity boards approve acquisition

Tesla Motors and SolarCity announced Monday that their corporate boards — minus Tesla CEO Elon Musk, who serves on both — have agreed to combine the two companies into a renewable energy powerhouse, in a deal worth roughly $2.6 billion.

Tesla’s proposed acquisition of SolarCity, which has prompted deep skepticism from many analysts, is still subject to the approval of federal regulators and each company’s shareholders, and it would not close until this year’s fourth quarter.

Together, the two companies would make and sell solar panels for generating energy, batteries for storing it and electric cars for using it on the road.

“The idea is that there’s one sales process, one installation process, one service contact, one phone app to monitor things,” Musk said Monday, in a conference call with Wall Street analysts.

Musk chairs both corporate boards and is the largest shareholder of each company, which prompted him to recuse himself from voting on the proposed acquisition.

“Tesla Motors Inc. needs to concentrate on manufacturing quality vehicles, delivering on its growing list of promises, keeping its existing customers happy, and generating profits ― it’s failing on all accounts,” said Mike Harley, an analyst with the Kelley Blue Book auto information service, in an emailed statement.

In its blog post Monday, Tesla argued that the companies together would be able to cut costs by $150 million in the first year after the deal closes.

Musk said Monday that the timing of the proposed deal had been driven, in part, by a joint project that SolarCity and Tesla announced in February, with Tesla supplying batteries to a solar power plant SolarCity will build in Hawaii.