Solarcity is an American company responsible for designing, making and supplying solar power systems for houses and business. Tesla has said the company's technology is well suited to supplying energy for its electric cars.
The deal will see Tesla become a completely 'vertical' energy company, providing customers with everything from the power source to the car itself.
In a previous letter of intent to Solarcity ahead of the deal, Tesla explained that the solar systems would also retain their ability to power everything else in a house or office.
It said: “With your Model S, Model X or Model 3, your solar panel system, and your Powerwall all in place, you would be able to deploy and consume energy in the most efficient and sustainable way possible, lowering your costs and minimising your dependence on fossil fuels and the grid.”