China’s Tencent Holdings Ltd has bought a 5 percent stake in U.S. electric car maker Tesla Inc for $1.78 billion. It is the latest investment by a Chinese internet company in the potentially lucrative market for self-driving vehicles.
Tencent’s investment provides Tesla with a deep-pocketed ally as it prepares to launch its mass-market Model 3. Tesla’s shares rose 2.7 percent to $277.45 on Tuesday. It was closing in on Ford Motor Co as the second-most-valuable U.S. auto company behind General Motors Co.
Tencent also could help the U.S. company sell – or even build – cars in China, the world’s largest auto market.
The deal expands Tencent’s presence in an emerging investment sector that includes self-driving electric cars. It could enable such new modes of transportation as automated ride-sharing and delivery services. As well as ancillary services ranging from infotainment to e-commerce could pop up.
Those new technologies, and their potential to create new business models and revenue streams in the global transportation sector. They have attracted billions in investment from China’s three tech giants (Tencent, Alibaba, and Baidu).
Founded in 1998 by entrepreneur Ma Huateng, Tencent is one of Asia’s largest tech companies. It is best known for its WeChat mobile messaging app. With a market capitalization of about $275 billion. It is roughly six times the size of 14-year-old Tesla, whose $45 billion market cap on Tuesday was only $1 billion shy of 114-year-old Ford.
Tencent owns about 8.2 million shares in Tesla, the carmaker said. Thus, it is the fifth-largest shareholder, behind Musk and investment companies Fidelity, Baillie Gifford and T. Rowe Price.
To help fund Model 3 production, Tesla raised about $1.2 billion by selling common shares and convertible debt earlier this month. Tencent said its shares were acquired as part of the early March equity sale and on the open market.
Source: Reuters (29/03/2017)
