Musk joined SolarCity’s quarterly conference call Tuesday, following the approval last week by SolarCity’s board of directors of Tesla Motors’ $2.6bn takeover offer for the California-based distributed solar giant.

Independent shareholders will get the final say on the deal later this year.

Musk, who is the chairman and largest shareholder of both Tesla and SolarCity, and his cousins Lyndon and Peter Rive, SolarCity’s chief executive and chief technology officer, claim there are myriad strategic reasons the two companies should be under the same roof.

Among those reasons is the potential to extend Tesla’s manufacturing knowhow gleaned from its Gigafactory in Nevada to SolarCity’s own high-stakes factory in New York.

Analysts have questioned SolarCity’s wisdom in wading into the brutally competitive PV manufacturing sector, an industry which has seen many of its leading players go bankrupt, and which is now dominated by vertically integrated Chinese players like Trina Solar and JinkoSolar which own multiple gigawatts of production capacity.

SolarCity embraced the PV manufacturing game and all the risks that come with it through its 2014 acquisition of high-efficiency cell and panel maker Silevo.

The company's initial plan is to build a 1GW factory near Buffalo, New York, although SolarCity already expects to expand the plant further.

Musk says SolarCity’s modules will stand out in the market thanks to their aesthetics, high conversion efficiencies, and low cost. There’s no tension between the last two, he insists.

“At Tesla we’re achieving the lowest cost per kilowatt-hour for [batteries] at the cell and pack level in the world – despite having the highest energy density,” Musk said in the call.

“We have the best cell and pack at the lowest price, the lowest cost. I’m confident we can achieve that at SolarCity as well.”

'Strategic' cell partnerships under consideration

Musk also revealed that SolarCity is in discussions with potential “strategic partners” when it comes to cell manufacturing.

A US trade ruling this summer would force SolarCity to pay duties on any China-made cells used to make modules at its New York factory.

“There may be some merit to bringing in a strategic partner, as Tesla has done with its battery-cell manufacturing,” Musk said, in reference to Japan’s Panasonic, which has partnered with Tesla at its Gigafactory in Nevada.

Should Tesla’s acquisition of SolarCity be approved, Tesla will be “adding considerably” to the technical team working on SolarCity’s module technology, Musk says. “This will become something far more than the original Silevo.”

Another potential benefit of a Tesla-SolarCity tie-up is the ability to cross-sell electric-vehicles, rooftop solar systems, and home battery packs.

While SolarCity operates in 19 US states and only recently branched out into its second country – Mexico – Tesla already operates in 40 countries around the world, Musk points out.

“We’d like to bring solar/battery solutions to all of those countries, and this would be particularly powerful in places like Germany and Australia,” he says.

Musk joined SolarCity’s analyst call a week after the company once again lowered its installation guidance for 2016, now set at 900-1,000MW.

That represents at least the third installation target the company has set for 2016. Only three months ago SolarCity lowered its full-year guidance to 1.0-1.1GW – having previously set it at 1.25GW.

In a shareholder letter, SolarCity said it will be right-sizing itself to suit its new target.

“As our infrastructure had been built to handle 1.25GW of annual capacity, we will be reducing our cost structure to accommodate our current forecasted volume run rate,” the letter says.

SolarCity deployed 211MW of PV capacity in the second quarter – 177MW of it in the residential sector and the remainder for commercial and industrial customers.

SolarCity’s net quarterly loss widened to $55.5m, from $22.4m in the year-ago period.

The company’s total sales soared 81% year on year, to $185.8m, with a particularly strong performance from systems under long-term loan arrangements, where revenues rocketed more than fivefold to $46.3m.

Revenue from leased systems, still SolarCity’s largest earner, rose 54% to $88.9m.