Chinese company Tencent picks up five percent of Tesla

China is the world's largest auto market and Tencent is one of Asia's largest tech companies – a powerful set of credentials to team up with Tesla.

|
Toby Melville/Reuters/File
A Tesla car showroom is seen in west London, Britain, on March 21, 2017.

The race to develop electric autonomous cars might have just become more interesting: Chinese internet giant Tencent has acquired a 5 percent stake in Tesla, becoming the fifth largest shareholder of the US electric car maker.

The Shenzhen-based company, known for messaging app WeChat, paid $1.78 billion for 8.2 million shares through a recent stock offering and open-market purchases, according to a regulatory filing to the Securities and Exchange Commission on Tuesday. The investment – the largest by a Chinese company in the market of self-driving vehicles and related services – provides Elon Musk’s Tesla with an additional boost as it prepares to launch its mass-market Model 3 electric sedan this year. 

“Tesla is a global pioneer at the forefront of new technologies,” a Tencent spokesperson said Tuesday, MarketWatch reported. “Tencent’s success is partly due to our record of backing entrepreneurs with capital; Elon Musk is the archetype for entrepreneurship, combining vision, ambition, and execution.”

Although famous for its messaging, media, entertainment, and payment services, Tencent, founded in 1998, has been betting its future on lucrative markets, particularly new transportation technology and services.

The company has invested in several Chinese electric vehicles startups, including Nio, a Shanghai-based electric vehicle startup that was previously known as NextEV, and Shenzhen-based Future Mobility. Tencent also has stakes in taxi-hailing app Didi Chuxing, the world’s second-largest ride services company behind Uber. Didi acquired Uber China’s assets last year. 

The move to buy Tesla’s shares might align with Tencent’s vision of an artificial intelligence future. With more than 250 people in its AI lab, the company has been investing in AI research, hoping to break new ground in social media and gaming. 

“Tencent used to be a product-driven company. Now we want to transform into a technology-driven company,” Zhang Tong, director of the research unit, told Bloomberg last Thursday. “We’ve reaped the benefits of a large population, now we need to use technology and AI.”

Last week, Tencent’s founder and chief executive Ma Huateng also signaled an interest in exploring AI technology to develop driverless cars, according to Bloomberg. Morgan Stanley auto analyst Adam Jonas said in an investor note that a collaboration between Tencent and Tesla in the development and deployment of some of those technologies wouldn’t be so surprising, according to Reuters. 

Revenues of Tesla cars tripled to more than $1 billion in China last year, meaning the country has the potential to become the Palo Alto-based company’s biggest market. According to a recent regulatory filing earlier this month, China contributed more than 15 percent of Tesla’s $7-billion total revenue in 2016. 

“Having Tencent as a partner helps position Tesla to launch the Model 3 in China,” Joseph Fath, a fund manager at global investment management firm T. Rowe Price, told Bloomberg on Tuesday. 

Two other Chinese tech giants, Baidu and Alibaba, have also accelerated their efforts to develop autonomous driving systems, hoping to bring a commercial ride-hailing fleet to China and the United States after 2020. 

This report includes material from Reuters. 

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to Chinese company Tencent picks up five percent of Tesla
Read this article in
https://www.csmonitor.com/Business/2017/0328/Chinese-company-Tencent-picks-up-five-percent-of-Tesla
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe