Tesla Motors has officially become a clean-energy company as Tesla shareholders backed the merger Thursday with SolarCity.
The deal, valued at about $2 billion, integrates Tesla’s energy storage unit and electric cars with SolarCity’s rooftop solar panels. Support was strong enough to bring in over 85 percent of Tesla shares in favor of the merger.
“We’re trying to make an integrated product,” Musk said during a meeting with Tesla shareholders in Fremont, Calif., yesterday. “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.”
The proposed merger went through a wave of scrutiny by analysts and a few of the Tesla shareholders concerned about both companies having fleeting profits, thousands of employees, and a gap in market identities. Taking on more debt and not having enough adequate corporate governance from both companies’ boards were other concerns expressed by observers.
An 85 percent vote does show a high level of support for CEO Elon Musk’s vision from shareholders.
“With an 85 percent vote, you’re seeing long-term shareholders say we’re voting for Elon,” said 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.'”
The merger has not officially closed. As that happens, analysts expect SolarCity won’t be a stand-alone brand, but will likely be integrated with the Powerwall battery for the home as a Tesla Energy product. Solar energy storage in Powerwall during power outages will be one of the benefits to sell through the merger.
“Moving forward I think SolarCity becomes a part of Tesla Energy, but I don’t think that happens overnight,” said Kallo.
Musk has been promoting the “Solar Roof” product that will customize SolarCity panel to a wide array of roof-top styles. He revealed the solar roof product on the “Desperate Housewives” set at Universal Studios in Los Angeles last month. The product will be equivalent in cost, or slightly cheaper, than a normal roof. Installations will begin in volume in mid-2017, and will be the only offering of its kind on the market, Musk said.
The deal drew mixed recommendations from proxy advisory firms.
ISS said Tesla would be able to bridge cash-burning SolarCity’s funding gap and called the deal a “necessary step” in the electric-car maker’s push to become an integrated sustainable energy company.
The CtW Investment Group, which works with pension funds, called on Tesla to implement corporate governance reforms, urging the company to add more independent directors to its seven-member board as a new president takes office.
“Given the risks the company faces with increased competition, a changing political environment and its expanding product line, Tesla desperately needs to upgrade its governance structure to a standard more befitting of a public company of its size,” said CtW director Dieter Waizenegger in a statement.
It’s not clear what role Lyndon Rive, SolarCity’s CEO and Musk’s cousin, will play in the combined company.
Musk owns 21 percent of Tesla and 22 percent of SolarCity, which makes him the largest shareholder at both companies.
Tesla has lost roughly $4.8 billion in market capitalization since the initial offer, while SolarCity’s value declined by about $86 million. Last month, Tesla reported its first quarterly profit in eight quarters. SolarCity has recorded losses in six of the last eight quarters.