China's Tencent takes 5% stake in electric-car maker Tesla

March 28, 2017 08:48 AM

Tesla Inc said Chinese tech giant Tencent Holdings Ltd has bought a 5 % stake in the U.S. company for $1.78 billion, as Chinese firms aggressively invest in electric vehicles amid tighter emission rules in the country.

Tesla's shares were up nearly 2 % at $275.60 in premarket trading on Tuesday.

Tencent owns about 8.2 million shares in Tesla, the carmaker said, making the Chinese company one of its biggest shareholders. 

Elon Musk-led Tesla has been raising capital as it readies for the launch of its mass-market Model 3 sedan.

The company 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 % as of Dec. 31.

Several Chinese electric vehicle start-ups, including LeSee, NextEV, Future Mobility and Qiantu Motor, are backed by big internet groups such as Alibaba and Tencent.

Tencent partnered with Hon Hai Precision Industry Co Ltd and China Harmony Auto Holding Ltd two years ago to explore opportunities related to electric vehicles.

Future Mobility, an automotive venture backed by Tencent and Hon Hai, aims to launch an electric self-driving car before 2020, entering a crowded field dominated by U.S.-based Tesla.

"Tencent's success is partly due to our record of backing entrepreneurs with capital," the company said on Tuesday.

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