Chinese Internet giant Tencent Holdings Ltd. bought a 5% stake in Tesla Inc. (IW 500/227), a vote of confidence in Elon Musk and his ambitions to take on more mass-market carmakers by bringing the Model 3 sedan to market.
Shenzhen-based Tencent paid about $1.8 billion for 8.17 million shares through Tesla’s recent stock offering and via open-market purchases, according to a regulatory filing Tuesday. The acquisition makes Tencent, the owner of the WeChat messaging app, Tesla’s fifth-largest shareholder, according to data compiled by Bloomberg.
“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.”
Tesla raised as much as $1.4 billion through a stock and debt offering earlier this month, more than initially sought, as it looked to cushion its balance sheet amid heavy spending to introduce the lower-priced Model 3. Tencent’s Chairman Ma Huateng envisions his company developing AI technology for driverless cars in the future.
Shares of Palo Alto, Calif.-based Tesla rose 1.9% to $275.42 as of 8:15 a.m. in New York, before the start of regular trading.
By Anne Riley Moffat