The idea of going into a Tesla showroom and get help on ordering a complete package that will enable you to get zero emission transportation and also to get a zero emission power plant on the roof of your house is a compelling constellation. Tesla’s already strong brand will become synonymous with sustainable living which will make it an even stronger brand. Buying a solar PV power plant for your house with back-up batteries is a complicated affair and you do not want to buy such a product from a week brand that you have little knowledge of or trust in. So I think it makes sense for Tesla and Solarcity to merge so that it becomes a company that under a single Tesla brand offers sustainable lifestyles with respect to energy and transportation.

I believe Musk has previously talked about manufacturing PV cells and panels but only when they have a plan for doing it on an unprecedented large scale in order to gain a cost advantage to other PV cell and panel makers. Today the worlds largest PV factories are at 1 Gw cells or panels per year so Musk will probable not make such a factory until he thinks he has a distribution system in place that can handle the output of a 10 Gwatt per year integrated, cell and panel factory.

Meanwhile the old auto-industry keep lobbying for regulations that will enable them to keep producing cars that are grossly unsafe to drive killing 1.2 million people per year globally and also causes millions more to die prematurely every year from lifelong inhalation of dangerous vehicle exhaust gasses.

Tesla losses last year around $2 billion.

Not good enough, so buying Solar City, losses last year around $2.8 billion.

Can the combined 'enterprise' crack the magic $5 billion a year losses this year?

You betcha!
Its a growth stock.

I'm a Tesla stock holder of modest 250 shares bought at $185 each with hardly earn personal money at the beginning of this year, waiting for them to double in value to purchase my long waited Model X P100D ... when it finally comes out, hopefully later this year, funding it by 1/3 with the plus-value on these Tesla shares, if my plan works.... And despite the negative reaction of Wall street since yesterday, I think this merge makes extreme sense to both companies on the long term. Note that on the short term it may look better for the SolarCity stock holders, because of premium offered, but also because the huge expansion of solar and renewables supply connected to the Grid, that yet cant store much energy, has had as a consequence in many places, to push down the KWH electricity prices at low consumption hours, during the day when the sun shines but demand is low, down to zero or even negative values during some short periods of time in Germany recently, expanding to Western Europe via European Grids interconnection. Same in Latin America, especially Chili. And this is meant to expand in the future years as more renewable sources w/o appropriate storage get connected to the Grid. But for me this is only short term and due to the absence of energy storage in the grid. Overtime, as more storage will be available at several levels including the grid itself, and/or more EVs will be charged at work, on Supercharge on the road, during the day, providing some of that missing storage / extra consumption during the day, the real cost of energy will get smoothened through the day and the night, while at the time the sun shines the main customers of Solar energy and best energy storer will become the EVs charging at work place, or on the road charging at Tesla Superchargers... So a lot of value can be retained from that partnership by Tesla too, overtime. Tesla accessing potentially cheaper and cheaper energy source for their Superchargers, whose future costs are planned for many years hence not subject to electricity market spikes. SolarCity getting a captive "in-phase" long term key customer that will most need energy during the day, as people travel best during daylight hours, means when they roof produce power... So they could fully leverage their solar pannels investments with far less Storage capacity than other Solar power vendors will need, as they will access that secured Tesla Superchargers demand. Great move Elon again !!!!
I listen to the Pure-Player EV + Battery being diluted with Solar but this is building tomorrow world and bet it will be different so worth taking some risks, but the don't buy the Analysts comments about SolarCity debt. This is presented as that debt was not connected to secured future Revenues. For me the long term contracts with roof owners secure that debt for a part, plus now the merge with Tesla will secure a certain price for the electricity produced a low consumption hours, so good on the long term to both parties. Hence this should not be seen as a dangerous debt but as a secured investment in my view.
Then comments on the cash consumption are valid and need to be adressed with more profitable revenue covering their expenses on both sides.