Tencent Holdings deal with Tesla boosts Chinese presence in U.S. auto tech

China’s Tencent Holdings Ltd has purchased a 5 percent stake in U.S. automaker Tesla for $1.78 billion, the most recent investment by a Chinese internet business in the potentially lucrative market for self-driving vehicles and associated services.

Tencent’s investment, shown in a U.S. regulatory filing, offers Tesla with a deep-pocketed ally as it prepares to release its mass-market Model 3. Tesla’s shares increased 2.7 percent to $277.45 on Tuesday, surrounding on Ford Motor as the second-most-valuable U.S. auto company behind General Motors.

Tencent also could assist the United States company sell – and even develop – automobiles in China, the world’s biggest auto market, experts stated.

“It definitely is a strong chess move for Tesla,” stated Jeff Schuster, senior vice president of forecasting for researcher LMC Automotive, mentioning the money infusion and aid “in navigating the Chinese market.”

Tesla CEO Elon Musk on Tuesday tweeted that he is delighted to have Tencent as an investor and consultant to Tesla. Musk did not state what he suggested by “adviser” however in a separate tweet he mentioned Tesla had “very few” Model 3 orders from China, where the vehicle has not been officially introduced.

In the United Stated, the Model 3 is due to go on sale later this year.