Tesla is to buy solar panel producer SolarCity for $2.6bn Reuters

Tesla is to buy SolarCity, a US company which designs, builds and sells solar panels, for $2.6bn (£2bn, €2.3bn). The move comes a month after the electric car maker first announces plans to acquire the company. The buy-out will be an all-stock transaction, with no cash changing hands.

Announced by Tesla on 1 August, the combining of these two companies will help Tesla in its pursuit of not just producing electric cars, but also providing the electricity to power both them and our houses through its Powerwall home battery system.

The merger will aim to create a single company which manages both the production and storage of electricity. Tesla describes this as a "fully integrated residential, commercial and grid-scale product" which aims to improve the way energy is generated, stored and consumed.

In a blog post, Tesla added: "Now is the right time to bring our two companies together. Tesla is getting ready to scale our Powerwall and Powerpack stationary storage products and SolarCity is getting ready to offer next-generation differentiated solar solutions. By joining forces, we can operate more efficiently and fully integrate our products."

Once combined, the service offered will include installation of panels and power packs, a single contract with Tesla, and a phone app to manage electricity production and usage.

Elon Musk is the chief executive officer of Tesla and also the chairman of SolarCity. He opted not to take part in votes happened at both companies to decide whether the merger should go ahead or not. Speaking before the deal was finalised, Musk said: "My personal opinion is that obviously this is something that should happen – like it's a no-brainer."

Tesla predicts that "cost synergies" from the two companies working together will be around $150m in the first 12 months, and it is also expected that customers will save money due to lower hardware costs, reduced installation costs and manufacturing efficiency. SolarCity products will be sold at Tesla's 190 retail stores.

SolarCity now has a 45-day 'go-shop' period, which means it has that time to look for alternative buyout proposals from third parties.