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Solar installer and financier SolarCity (s SCTY) is getting into the solar manufacturing market for the first time with the announcement that it plans to acquire a solar cell maker startup called Silevo. According to a filing SolarCity will pay $200 million worth of SolarCity common stock at the close of the transaction, and an option for another $150 million in shares upon achievement of certain milestones.

Founded in 2007 and based in Fremont, California, Silevo developed a new type of solar cell design using silicon (the main material in traditional solar panels) but also combining different materials for other cell components to squeeze more energy out of the system and to improve the cell’s efficiency. The company uses more efficient single-crystal silicon as the base layer, and then it adds on a “tunneling oxide layer” and a layer of amorphous silicon to alter the voltage and current of the cells.

In a blog post, SolarCity CEO Lyndon Rive called Silevo’s tech “what we believe is fundamentally the best photovoltaic technology,” and said SolarCity plans to scale up their solar manufacturing to 1 GW within two years and larger in subsequent years. At 1 GW, the factory would be one of largest in the world. SolarCity said it is looking at New York for the first factory.

Silevo had raised at least $55 million from three China-based investors: DT Capital (affiliated with Madrone Capital), NewMargin Ventures, and GSR Ventures (connected to Mayfield Fund). GSR Venture’s Richard Lim is the securityholder representative on the acquisition filing.

The news is surprising because it means SolarCity has jumped squarely into the solar manufacturing market. Previously the company has focused on financing, installing and marketing solar panels. But now the firm could also be making its own, meaning its becoming a much more vertically-integrated company.

In the blog post CEO Rive said:

Given that there is excess supplier capacity today, this may seem counter-intuitive to some who follow the solar industry. What we are trying to address is not the lay of the land today, where there are indeed too many suppliers, most of whom are producing relatively low photonic efficiency solar cells at uncompelling costs, but how we see the future developing. Without decisive action to lay the groundwork today, the massive volume of affordable, high efficiency panels needed for unsubsidized solar power to outcompete fossil fuel grid power simply will not be there when it is needed.

The Silevo solar cell can deliver 24 percent efficiency when it’s been scaled up in production, for the same cost of making a standard cell, said SolarCity CTO Peter Rive on a conference call later in the morning discussing the deal. The cell can be made from standard off-the-shelf manufacturing tools from the semiconductor industry.

“We’ll be the most vertically integrated company in the world,” when this is built out, said Rive.