Tesla, SolarCity Agree to Merge

US electric vehicle manufacturer Tesla will buy photovoltaic solar power systems company SolarCity for $2.6bn, the companies said today.

Tesla says the merger would create a fully integrated residential, commercial and grid-scale solar energy and energy storage company, the first of its kind. SolarCity would become a wholly owned subsidiary of Tesla as part of the deal.

Tesla chief executive Elon Musk is already a major shareholder in SolarCity and is a cousin of SolarCity's chief executive and chief technology officer.

Musk recently outlined plans to create a solar and battery storage product as part of Tesla's offerings, saying a merger of the companies is important to reaching that goal. He proposed the merger in June. Tesla aims to more fully integrate its own Powerwall home energy storage batteries with SolarCity's rooftop solar installations.

"Now that Tesla is ready to scale Powerwall and SolarCity is ready to provide highly differentiated solar, the time has come to bring them together," Musk said.

The companies aim to close the transaction in the fourth quarter of this year, after receiving approval from shareholders, regulatory approvals, and meeting other conditions of the merger agreement.

The merger agreement allows SolarCity until 14 September to solicit additional bids for the company.

Separately, the company today said it installed 201MW of solar in the second quarter of the year, about 15MW more than expected. But because bookings for residential installations are lower than expected so far this year, the Solarcity now says will install a total of 900-1,000MW in 2016, down from previous guidance of 1,000-1,100MW. The company built 870MW last year, bringing its total to 2,160MW for more than 275,000 customers.