On Tuesday, Tesla Motors Inc (NASDAQ:TSLA) revealed its intention of buying SolarCity Corp (NASDAQ:SCTY), for which it was ready to pay $2.8 billion. This news helped the solar company’s stock soar by as much as 15% in after-hours trading. However, it proved disastrous for Tesla Motors Inc (NASDAQ:TSLA) as its stock lost 10%, dropping below $200 per share in after-hours trades for the first time since March.

Tesla Motors Inc (TSLA) Drops, SolarCity Corp (SCTY) Soars On Bid News  

What’s in the deal for Tesla?

Elon Musk is the controlling shareholder at SolarCity Corp (NASDAQ:SCTY) and also CEO of Tesla Motors Inc (NASDAQ:TSLA). He said the two sets of shareholders will vote on the merger independent of Musk after a due diligence process. For quite some time now, Tesla Motors Inc (NASDAQ:TSLA) has considered the deal “blindingly obvious,” but the timing seems right now since there is an increasing alignment between the products the companies released, said Musk in a conference call.

With a focus on lowering both cost of sales and cost of implementation, Musk said, “It improves the efficiency of the setup. Instead of having, say, three different trips to a house to put in a car charger and solar power and a battery pack, you can actually integrate that into a single business.”

Tesla Motors Inc (NASDAQ:TSLA)’s electric car drivers will be able to harness the power of the sun in an “end-to-end clean energy product” with the help of this merger, which could happen as early as next year, the EV firm said. A partnership already exists between the two companies, under which SolarCity Corp (NASDAQ:SCTY) uses battery packs from Tesla for its solar projects.

In a blog post, the EV firm said, “It’s now time to complete the picture.”

Musk informed investors that if the deal is approved, SolarCity Corp (NASDAQ:SCTY)’s products would fall under the Tesla Motors Inc (NASDAQ:TSLA) brand. SolarCity stated in an SEC filing that it intends to carefully evaluate the proposal.

No additional risk

Speaking in a conference call, SolarCity Corp (NASDAQ:SCTY) Co-founder and CEO Lyndon Rive said the company is becoming increasingly product-focused. In an email to employees, Rive said there are tremendous synergies between the two companies and that shareholders will be the ultimate decision makers. SolarCity shares are down significantly – more than 58% year to date — but executives say this won’t affect the deal.

“I don’t think this creates additional financial risk for Tesla,” Musk said, adding that the deal won’t create any major debt for the EV firm.

On Tuesday, Tesla Motors Inc (NASDAQ:TSLA) shares closed down 0.04% at $219.61. Year to date, the stock is down almost 8%, while in the last year, it is down by over 16%.