Tesla Motors has proposed a deal where the electric car company will combine with SolarCity. The all-stock deal has an estimated value of $2.8 billion. Elon Musk is the chairman of both companies and is the largest shareholder.

In an open letter to SolarCity Chief Executive Lyndon Rive, Musk estimated it would offer an estimated $26.50 to $38.50 per share. This is roughly 21 to 30 percent higher than the current price of SolarCity. On Tuesday, the solar energy business closed at $21.19 per share. Interestingly, Lyndon Rive is also Musk’s cousin since their mothers are twins.

Tesla Shares Tumble

Following the announcement, shares in Tesla dropped by 12 percent. After-hours trading saw SolarCity shares advance by 15 percent. Musk has borrowed money and moved around funds at his company in order to finance the deal. Considering his personal interest, Musk has also recused himself from voting on the deal that was brought before the Tesla board. He will also recuse himself when the proposal is given to the board at SolarCity. The offer was approved by Tesla, and it still has to go before the SolarCity board.

The deal arrives as Tesla Motors is searching for better batteries that can be used in conjunction with solar panels. Ultimately, the acquisition would lead to a company of nearly 30,000 employees. All solar panels, electric cars and batteries will be rebranded with the Tesla name.

Investors are wary of the potential deal since it adds to the complexity of Tesla’s vertical integration and business practices. In essence, it will be adding an unprofitable company to Tesla’s already shaky finances. Tesla has already started a $5 billion battery factory in Nevada that will not be profitable until at least 2020. To finance that move, it raised $1.7 billion in a share sale.

Currently, Tesla has a market capitalization of $32.7 billion. SolarCity only has a market value of about $2.1 billion. Musk also happens to be the largest shareholder and chief executive of Space Exploration Technologies. The rocket maker was the largest buyer of the $214 billion in bonds that SolarCity offered in 2014. Previously, Musk has received $475 million in personal credit lines to provide capital for Tesla and SolarCity. While investors have questioned the financial maneuvering, Musk has defended them as a way to demonstrate to investors that he believes in the cause and is willing to risk his own money in the ventures.

While Tesla’s stock price has advanced by 500 percent since 2013, investors are still wary that Tesla will crash and burn. SolarCity has watched its stock decline by 60 percent in the last year, so the purchase seems like a large risk for Tesla. The solar industry is facing stiff blowback from electric utilities as solar power eats into sales of electricity. This has made it harder to sell solar panels and provide loans for installing them. If SolarCity approves the offer, then Tesla’s shares could take another tumble.