Tesla expects SolarCity to contribute over $1 billion in revenue in 2017 (TSLA, SCTY)

Thomson Reuters

Tesla expects SolarCity to contribute over $1 billion in revenue in 2017 if the proposed merger is approved, Tesla wrote in a blog post Tuesday.

Tesla released financial information related to the SolarCity merger, which shareholders will vote on November 17. In the post, Tesla said it expects SolarCity to add more than half a billion dollars in cash to Tesla's balance sheet over the next three years and "to contribute $1+ billion in revenue in 2017."

Tesla also expects SolarCity "to immediately account for 40% of the assets of the combined company on a historical cost basis."

Tesla CEO Elon Musk said on Tesla's third-quarter earnings call that he expects SolarCity to be neutral or "perhaps a cash contributor" in the fourth quarter.

Tesla reaffirmed in its blog post that it expects to "achieve cost synergies of $150 million in the first full year after closing" following a merger, which SolarCity first mentioned in a blog post in August.

The word synergies implies layoffs are ahead. Business Insider's Bob Bryan wrote that we could see as much as 1,000 employees let go.

SolarCity shares have plummeted by 45% since the beginning of the year. The company cut its marketing costs and laid off members of its marketing team over the summer.

Strapped for cash, SolarCity has changed its strategy. The company has conventionally leased panels, but is now selling more panels to increase cash flow. SolarCity introduced a loan program in June to incentivize purchasing as part of that change in strategy.

Tesla noted this change of strategy in its blog post.

"Nearly one-third of SolarCity’s residential bookings in September were purchases, an approximately four-fold increase over the percentage in Q1. As a combined company, we expect this percentage to continue to increase in 2017," the post reads.

Musk is the largest shareholder in both companies and is also the cousin of SolarCity's CEO Lyndon Rive. The proposed merger has been met with criticism as Tesla has a lot to contend with in 2017 with Model 3 production and would be adding SolarCity's $3+ billion in debt to its balance sheet.

"Those same naysayers may have similar feelings about solar and storage, but it probably would be unwise to trust them again," Tesla wrote in the blog post, referring to critics of Tesla's electric car business. "Indeed, we are just as confident that the future of energy generation will overwhelmingly consist of solar paired with an integrated storage system."

Tesla reported a profit of $111 million, or $0.71 on an adjusted per share basis, in the third-quarter. That was Tesla's first quarterly profit since early 2013.

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