Tencent Takes A 5% Stake In Tesla

The bulls and bears are battling it out on Wall Street over whether Tesla stock — now selling for close to its highest price ever — will continue to climb or fall back to less stratospheric levels. The bears are particularly concerned that Tesla will not be able to get the Model 3 into production as quickly as Elon Musk says it will.

Tesla Logo

None of those fears were enough to deter Tencent — one of the wealthiest companies in China — from buying $1.8 billion worth of Tesla stock earlier this month, according to a recent filing with the Securities and Exchange Commission. The purchase makes Tencent the 5th largest Tesla shareholder behind T. Rowe Price, Baillie Gifford, HMR, and Elon Musk.

“Glad to have Tencent as an investor and advisor to Tesla,” Musk tweeted Tuesday. In an e-mail to Bloomberg, Tencent said, “Elon Musk is the archetype for entrepreneurship, combining vision, ambition, and execution. Tesla is a global pioneer at the forefront of new technologies including electric vehicles, assisted driving, shared vehicles, digitizing real-world information, sustainable energy generation and scalable energy storage.”

“Having Tencent as a partner helps position Tesla to launch the Model 3 in China,” says Joseph Fath, a fund manager at T. Rowe Price. “Tencent is one of the three superpowers in China along with Baidu and Alibaba and they clearly have a lot of backing from the government.” China is the world’s largest new car market and is critical to Tesla’s global sales plans.

“Tencent’s philosophy is to just invest in the best companies in the world,” David Chao, the co-founder of venture-capital firm DCM, said in a text message. Tencent owns WeChat. Chao says its fan pages and communities could significantly boost the Tesla brand in China, especially if the company chooses to integrate the WeChat app into its cars. “There are so many connections. It makes a lot of sense.”

Tencent is also an investor in NextEV, the electric car startup owned by Chinese internet entrepreneur William Li. Tencent has cooperated with companies it has invested in previously, but there are no plans for cooperation with Tesla at the present time according to an email from the company.

Tencent chairman Ma Huateng told the press earlier this month he envisions his company developing AI technology for driverless cars in the future. The Shenzhen based company is one of the biggest investors in Chinese ride sharing giant Didi Chuxing and owns stakes in mapmakers NavInfo Co. and HERE, the German consortium owned by BMW, Audi and Daimler.

Source: Bloomberg



Steve Hanley

Closely following the transition from internal combustion to electricity. Whether it's cars, trucks, ships, or airplanes, sustainability is the key. Please follow me on Google + and Twitter.