In recent news Tesla has announced it will spend nearly $2.6 billion to purchase SolarCity, a company that makes solar panels and is based in San Mateo, California. Elon Musk is the largest shareholder of both Tesla and SolarCity and the solar panel company is run by his cousin Lyndon Rive. This buyout should help increase the value of both companies and put Tesla in a position that will make them able to make the steps forward that Elon Musk has been looking to take for the new lineup of vehicles and the new batter plant that’s being built by Tesla.

While we think of Tesla as a company that only builds the most innovative electric vehicles on the market today this partnership will allow Tesla to build beyond vehicles. The ideal use of this partnership would be to provide battery systems that can store solar energy in homes and businesses to offer more renewable clean energy in more aspects of our lives than just in our vehicles. This marriage is also meant to help Tesla create a way for their factories to be solar powered and store the energy needed to operate the machinery, making them fully self-sustaining.

By adding solar power to the factories of Tesla Motors Inc. not only will the factories be able to operate independent of the electric grid of the area, they will be able to put energy back into the electric supplies of the surrounding area to allow for more affordable energy in the Silicon Valley area of California. While this is what the future may hold for both Tesla and SolarCity and you can certainly expect Tesla to use solar technology in their vehicles at some point in the future, the current state of affairs is one of losses that need to be turned around.

Over the past two years Tesla has lost $1.2 billion and SolarCity $1.1 billion. This year has proved to be much the same story for both companies as Tesla works to find a way to bring production up to the 500,000 units per year goal that was set earlier this year and SolarCity has experienced lower than expected residential bookings during the first half of the year. This puts the two companies in a positon where collaboration might be the best solution for everyone involved as they work to develop technology that will make both companies more profitable for the future.

There is a period of time that SolarCity can look for another company to purchase them and the deal has to be approved by a majority of the disinterested shareholders of both companies before its finalized, but this deal is expected to go through without any substantial challenges. As we near the closing period of the deal in the fourth quarter of this year we can only hope that the next steps taken by both companies are to find ways to enjoy the technology and create much better products for the future of the automotive and construction industries.