Musk started both companies, and is the majority shareholder in each. His brother, Peter is the founder of the company and its chief technology officer.
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SolarCity is carrying over $6.25 billion worth of liabilities, including its debt.
Speaking to investors, Musk said the move was a “no brainer” as Tesla could then provide direct to its customers not only an electric vehicle but also the solar panels to generate the electricity the auto runs on and a home energy storage system to keep any excess electricity.
Musk, chairman of both companies, defended the deal, calling it a “no-brainer” and asserting “zero doubt” about it. Tesla’s bid confirms rumors which first picked up months ago suggesting Elon Musk was interested in the solar energy producer.
If the deal goes through, it would be the world’s sole “vertically integrated energy company offering end-to-end clean energy products to our customers”, Mr. Musk said.
SolarCity has an existing partnership with Tesla, using Tesla battery packs as part of its solar projects.
SolarCity shareholders seemed pleased with the news, with the company’s stock up 16 percent, to $24.50 in after-hours trading after the announcement.
In an all-cash acquisition deal, which could stand at a net value worth 2.8 billion dollars, Tesla aims to integrate SolarCity into its electric auto business and emerge out as a one-stop shop for all electric mobility technologies and the peripherals required to support the ecosystem.
Mr Chanos has taken short positions in both Tesla and SolarCity.
In a conference call with reporters, Tesla Motors CEO Elon Musk explained this reasoning further. The goal is to generate clean renewable energy, store it in Tesla’s stationary energy storage products and consume it in Tesla’s vehicles.
But investors sent Tesla stock down as much as 12% when markets opened.
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SolarCity is now under a debt of $3 billion, while the most recent earning reports claim that the company isn’t profitable either.
