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Tesla shares crater as Wall Street reacts to bid for SolarCity

Shares of Tesla Motors shed more than 10 percent Wednesday after the company proposed to buy out SolarCity for about $2.8 billion.

Some Wall Street analysts saw the acquisition bid as a negative for Elon Musk's electric car company, including analysts at Oppenheimer and RBC Capital Markets.

Oppenheimer downgraded Tesla shares to perform from outperform and removed its price target of $385.

"While we remain bulls on the solar industry, we do not view this acquisition as the best and highest use of TSLA's capital and human resources given the potential return on capital possible in the electricity industry (typically ~8%-9%) versus the potential leverage of the TSLA auto platform which we believe could demonstrate [return of invested capital] of 15%-20%+," they said in a Tuesday note to clients.

Meanwhile, RBC Capital Markets analyst Joseph Spak said in a note Tuesday that while Tesla sees a number of synergies from the transaction, it will not be well received by shareholders.

"We suspect the market will be more skeptical of the strategic rational and the financial/cash flow strain this could add to the TSLA story. By owning the asset, we believe TSLA may be trying the investing partner approach they have taken with shareholders and asking them to stick with them for something they potentially didn't sign-up for," Spak said.

Analysts at Deustche Bank said Wednesday that while the move may fit, "it is not a 'no brainer' for us."

"While there are clear overlaps between the companies (Tesla's battery packs, and even their vehicles can efficiently store the energy produced by SCTY's solar installations; Tesla stores could sell Solar/Battery/Vehicle packages), we note most shareholders in Tesla, and most Tesla customers were not planning to engage in building an 'energy solutions company,'" they said in a note.

On CNBC's "Closing Bell" on Wednesday, experts were more blunt in their disapproval. Bob Lutz, a former GM vice chairman, said, "People finally are beginning to figure it out: They've drunk the Elon Musk Kool-Aid."

"They've drunk it long enough and nothing's working," Lutz added. "This deal makes zero sense. It's going to further put a huge amount of financial pressure on Tesla, which is already in financial trouble."

Bill George, a Harvard Business School professor and former chairman of Medtronic, told the show the deal was a "bridge too far" and he is skeptical it would actually take place.

"I think he's going to have a further comeuppance from his shareholders to Tesla in trying to bail out SolarCity," George said. "He says he's an energy company. I mean, being an automobile company is tough enough."

Entering Wednesday's session, Tesla's stock was down 8.5 percent year to date and had shed more than 15 percent over the past 12 months.

TSLA 12-month chartSource: FactSet

CNBC's Ivan Levingston contributed reporting.