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He explained that while Tesla is selling electric vehicles at the moment, there have been signs that its CEO, Musk, has been intending to do more.
"If you look at what he's doing with the Gigafactory, you look at this acquisition, he's clearly going after the decarbonization of the electric grid in the U.S. To me, that's the bigger play in all of this," Kelly said.
Trader Karen Finerman said that Tesla's offer, valued up to $28.50 per share, "doesn't seem like a gigantic price for a company that was trading significantly higher not that long ago."
SolarCity shares closed at $21.19 on Tuesday, which is more than 75 percent below its all-time closing high of $86.14.
Trader Tim Seymour said that the timing of the deal seems "distracting," citing Tesla's struggles to meet sky-high expectations for deliveries and its mass-market car.
"They just had a capital raise. They probably need more capital. I mean, why now? ... This deal makes no sense," he said, adding that he's always found Tesla's valuation tough to justify.
Wall Street will surely be watching the aftermath of Tuesday's announcement closely. Famed short seller Jim Chanos has been outspoken about his short positions in both companies.
In September, Chanos told CNBC's "Squawk Box" that SolarCity is the most problematic of companies led by Musk because it's "burning $300 million to $500 million a quarter putting up solar panels that may not be worth anything in 20 years."
Karen is long BAC, C, DRII, DRII calls, FB, FL, GOOG, GOOGL, JPM, LYV, KORS, KORS, KORS puts, WIFI long call spreads, M, MA, SEDG, SPY puts, URI. Her firm is long ANTM, AAPL, BAC, C, C calls, DRII, DRII calls, FB, GOOG, GOOGL, JPM, JPM calls, KORS, LYV, M, MOH, PLCE, SPY puts, URI, WIFI. Her firm is short IWM, MDY. Karen Finerman is on the board of GrafTech International.
BA CC EVGN KBH MJNA MU OLN PFE PHM T TWTR UA GDX KIDS own EFA EFG EWJ IJR SPY NO SHORTS Stuart Frankel & Co Inc. and some of its partners: DAL LUV AAPL UAL LDP WDR AVP CVX FCX IBM ICE KDUS KO MAT MCD MJNA NE NEM OLN OXY RIG STAG TAXI TEX TITXF URI VALE WDR WYNN ZNGA CUBA HSPO ICE AMZN MJNA TITXF NXTD
Brian Kelly is long Bitcoin, GLD, SFK, SLV, TLT, US Dollar UUP. He is short CS, DB, UBS
Tim Seymour is long APC, AVP, BAC, BBRY, CLF, DO, EDC, EWZ, F, FCX, FXI, GM, GOOGL, GRMN, GE, INTC, LQD, M, MCD, MPEL, NKE, RACE, RAI, RH, RL, SINA, T, TWTR, UA, VALE, VZ, XOM. short: SPY, WYNN, XRT. Tim's firm is long ABX, BABA, BIDU, CLF, EWZ, F, HD, KO, MCD, MPEL, NKE, PEP, PF, SAVE, SBUX, SINA, VALE, VIAB, WMT, WEN, YHOO, short HYG, IWM