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New York - Tesla Inc. got a vote of confidence from Chinese Internet giant Tencent Holdings Ltd., whose purchase of a 5% stake boosts Elon Musk’s ambitions to get his mass-market Model 3 electric sedan to buyers this year.
Tencent paid about $1.8bn for 8.17 million shares through Tesla’s recent stock offering and via open-market purchases, according to a regulatory filing on Tuesday.
Tesla raised as much as $1.4bn through a stock and debt offering this month, more than initially sought, to cushion its balance sheet amid heavy spending to introduce the lower-priced Model 3.
The acquisition makes Tencent, the Shenzhen-based owner of the WeChat messaging app, Tesla’s fifth-largest shareholder, according to data compiled by Bloomberg.
Tencent’s Chairman Ma Huateng envisions his company developing AI technology for driverless cars in the future.
“Elon Musk is the archetype for entrepreneurship, combining vision, ambition, and execution,” Tencent said in an email.
“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.”
Shares of Palo Alto, California-based Tesla rose 3.1% to $278.49 as of 9:40am in New York, the highest intraday level in more than a month.
China Reach
Tesla’s revenue from China last year tripled to more than $1bn, indicating better traction in the market Musk has predicted could eventually become the company’s biggest.
China accounted for more than 15% of Tesla’s more than $7bn of total revenue last year, according to a US regulatory filing earlier this month.
Tesla company doesn’t release vehicle sales or deliveries by country.
“Having Tencent as a partner helps position Tesla to launch the Model 3 in China,” said 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.”
T. Rowe Price is the seventh-largest investor in Tencent, with 99.5 million shares, and the fourth-ranked investor in Tesla, with 11.9 million shares, according to data compiled by Bloomberg.
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