US-based automotive and energy storage company Tesla Motors has agreed to acquire solar panel maker SolarCity in a deal worth $2.6bn.

The SolarCity acquisition is expected to create the world's only vertically integrated sustainable energy company.

The deal will provide Tesla Motors with significant cost savings and dramatic improvements in manufacturing efficiency, reported Reuters.

As part of the deal, shareholders of SolarCity will receive 0.110 Tesla common shares for very share held.

The deal includes a 45-day period for SolarCity, allowing it to solicit alternative proposals during the time frame.

Tesla said in a statement: “Solar and storage are at their best when they're combined. As one company, Tesla (storage) and SolarCity (solar) can create fully integrated residential, commercial and grid-scale products that improve the way that energy is generated, stored and consumed.”

The deal follows an offer made by Tesla Motors to acquire SolarCity for $2.8bn in June 2016.

The move is part of Tesla's efforts to shift its focus towards sustainable transportation by offering increasingly affordable electric vehicles.

The combined company, which would provide solar panels, residential and commercial battery storage systems and electric vehicles under a single brand, is expected to save $150m in costs in the first full year.

Scheduled to be completed in the fourth quarter of this year, the transaction is subject to approval from shareholders, regulatory approvals, and meeting other conditions of the merger agreement.

Image: Tesla Motors headquarters in Palo Alto, California, US. Photo: courtesy of Tumbenhaur/Wikipedia.