(Reuters) - Tesla Inc, the California-based electric carmaker, said Chinese tech giant Tencent Holdings Ltd acquired a 5 percent stake in the U.S. company for $1.78 billion.
The purchase, revealed in a U.S. regulatory filing, gives Shenzhen-based Tencent a growing presence in the rapidly expanding future mobility sector, with investments in U.S. and Chinese startup companies that provide ride sharing services and are developing self-driving electric vehicles.
Tencent's investment also provides Tesla with an additional cash cushion as it prepares to boost production volume and launch its new Model 3. Tesla's shares were up 2.7 percent at $277.35 in early trading.
Founded in 1998 by entrepreneur Ma Huateng, Tencent is one of Asia's largest tech companies, best known for its widely used WeChat mobile messaging app.
Tencent was an early investor in NextEV, a Shanghai-based electric vehicle startup which since has rebranded itself as Nio and whose U.S. headquarters in San Jose is not far from Tesla's Palo Alto base. Tencent also maintains a U.S. office in Palo Alto, in the heart of California's Silicon Valley.
Tencent has funded at least two other Chinese EV startups, including Future Mobility in Shenzhen.
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Tencent owns about 8.2 million shares in Tesla, the carmaker said. Tencent is now the fifth-largest shareholder in Tesla, behind Elon Musk and investment companies Fidelity, Baillie Gifford and T. Rowe Price.(https://bsmedia.business-standard.combit.ly/2nvNeMI)
As Tesla is doing, Nio and Future Mobility have said they are working on self-driving electric vehicles that could be introduced by 2020.
In addition, Tencent has invested in Didi Chuxing, the world's second-largest ride services company behind Uber, and in Lyft, Uber's chief U.S. rival.
Elon Musk-led Tesla raised about $1.2 billion by selling common shares and convertible debt earlier this month.
Musk is Tesla's top shareholder, with a stake of about 21 percent as of Dec. 31.
(Reporting by Rishika Sadam in Bengaluru, Sijia Jiang in Hong Kong and Paul Lienert in Detroit; Editing by Nick Zieminski)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)