Tesla goes beyond electric cars with SolarCity merger

SolarCity employees installing solar panels on the roof of a New Jersey home. SolarCity is expected to cease being a standalone brand, as Tesla markets its Powerwall battery for the home as a Tesla Energy Product. It is not clear what role SolarCity
SolarCity employees installing solar panels on the roof of a New Jersey home. SolarCity is expected to cease being a standalone brand, as Tesla markets its Powerwall battery for the home as a Tesla Energy Product. It is not clear what role SolarCity CEO Lyndon Rive, who is Tesla chief Elon Musk’s cousin, will play in the merged firm.PHOTO: BLOOMBERG

SAN FRANCISCO • Mr Elon Musk's Tesla Motors officially moved beyond electric cars and became a clean energy company, as shareholders overwhelmingly approved the acquisition of SolarCity.

The deal, valued at about US$2 billion (S$2.83 billion), will integrate the maker of all-electric cars and batteries with the installer of rooftop solar panels. Over 85 per cent of Tesla shares were represented in the "yes" vote on Thursday.

The deal, which sparked controversy over debt and corporate governance concerns, is a win for Mr Musk's vision of Tesla as one-stop shopping for consumers eager to become independent of fossil fuels.

Now comes the task of integrating two companies that have a track record of fleeting profits and frequent fund-raising needs - not to mention thousands of employees.

"We're trying to make an integrated product," Mr Musk said during a meeting with Tesla shareholders in California on Thursday. "So you have an integrated solar roof with a Powerwall and an electric car, and you just go into a Tesla store, just say yes, it just happens. It all works, it's seamless and you love it."

Tesla plans to leverage its formidable brand and retail network with SolarCity's network of rooftop solar installers and recently announced a "Solar Roof" product.

It is not clear what role SolarCity's chief executive officer Lyndon Rive, who is Mr Musk's cousin, will play in the merged firm.

"With an 85 per cent vote, you're seeing long-term shareholders say we're voting for Elon," said Mr Ben Kallo, an analyst with Robert W. Baird. "They're saying 'We're not here for the next quarter, we're here for three or five years'."

It was not clear when the merger will officially take effect. SolarCity is expected to cease being a standalone brand, as Tesla markets its Powerwall battery for the home as a Tesla Energy Product.

Mr Musk owns 21 per cent of Tesla and 22 per cent of SolarCity, making him the largest shareholder of both companies. He and Mr Antonio Gracias, who also serves as director at both companies, recused themselves from a board vote on July 30.

Tesla rose 2.6 per cent to US$188.66 at the close on Thursday, while SolarCity gained 2.9 per cent to US$20.40.

The deal drew mixed recommendations by proxy advisory firms, with Institutional Shareholder Services giving its blessing and Glass Lewis rejecting it as a "thinly veiled bailout plan".

The combined company must contend with President-elect Donald Trump, whose views on energy are a sharp departure from President Barack Obama's.

The real estate mogul has vowed to roll back environmental regulations and tapped climate change sceptic Myron Ebell to head his Environmental Protection Agency transition team.

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A version of this article appeared in the print edition of The Straits Times on November 19, 2016, with the headline 'Tesla goes beyond electric cars with SolarCity merger'. Print Edition | Subscribe