China's Tencent Holdings has bought a 5 percent stake in U.S. electric car maker Tesla for $1.78 billion, the latest investment by a Chinese internet company in the potentially lucrative market for self-driving vehicles and related services.
Tencent's investment, revealed in a U.S. regulatory filing, provides Tesla with a deep-pocketed ally as it prepares to launch its mass-market Model 3. Tesla's shares rose 2.7 percent to $277.45 on Tuesday, closing in on Ford Motor as the second-most-valuable U.S. auto company behind General Motors.
Tencent also could help the U.S. company sell - or even build - cars in China, the world's largest auto market, analysts said.
"It certainly is a strong chess move for Tesla," said Jeff Schuster, senior vice president of forecasting for researcher LMC Automotive, citing the cash infusion and "help in navigating the Chinese market."
Tesla Chief Executive Officer Elon Musk on Tuesday tweeted: "Glad to have Tencent as an investor and adviser to Tesla." Musk did not say what he meant by "adviser" but in a separate tweet he noted Tesla had "very few" Model 3 orders from China, where the car has not been formally introduced.
The midsize Model 3 is due to go on sale later this year in the United States.