SolarCity Corp (NASDAQ:SCTY) announced Tuesday that it has signed a deal to buy Silevo Inc., a Fremont-based manufacturer of photovoltaic panels. Silevo specializes in producing high-efficiency panels. The San Mateo-based company didn’t disclose terms of the deal. SolarCity said that it plans to build one of the world’s largest solar manufacturing plants in New York. The company needs new plants to realize Silevo’s designs.

SolarCity SCTY

SolarCity’s new plant to have 1GW capacity

SolarCity Corp (NASDAQ:SCTY) chairman and largest shareholder Elon Musk said that the company is in talks with New York officials to build a manufacturing plant, taking further the relationship developed by Silevo. SolarCity is targeting 1GW capacity for the new plant in the next two years. Musk said the company will subsequently build significantly larger plants in coming years.

SolarCity Corp (NASDAQ:SCTY) has grown to become the largest U.S. residential solar company by offering rooftops systems at no upfront cost. The customers who sign up for its program agree to make monthly payments for decades. Silevo will allow the company to use its own high-efficiency panels for rooftop power systems. SolarCity said it’s not contemplating any other acquisition at the moment. But it may acquire additional companies to ensure its clear leadership in the solar market.

SolarCity preparing for an era without renewables subsidies

The company’s decision to build a giant manufacturing plant seems counter-intuitive because the market is already oversupplied with panels. Chinese panel makers have flooded the markets with cheap solar panels. SolarCity Corp (NASDAQ:SCTY) says most of those suppliers are producing low-efficiency solar cells at uncompelling costs. It is preparing for an era where renewable energy subsidies are gone and panels need to become more efficient to outcompete fossil fuel grid power.

SolarCity Corp (NASDAQ:SCTY) CEO Lyndon Rive will host a conference call at 10:00 AM ET today to discuss the proposed acquisition. The company shares skyrocketed 9.11% to $60.05 in early trading session Tuesday.