Tencent Holdings Limited has acquired a 5% stake in Tesla Inc (NASDAQ:TSLA), according to a new filing with the U.S. Securities and Exchange Commission.
Tencent, an investment holding company headquartered in Shenzhen, China, now owns 8.17 million shares of the California-based electric car maker. The Chinese tech giant has paid $1.78 billion to buy the stock.
Tencent is now the fifth-largest shareholder in Tesla, behind Elon Musk, Fidelity, Baillie Gifford and T. Rowe Price. Musk is Tesla’s top shareholder, holding a 21% stake as of Dec. 31.
The deal gives Tencent “a growing presence in the rapidly expanding future mobility sector, with investments in U.S. and Chinese startup companies that provide ride sharing services and are developing self-driving electric vehicles,” Reuters reported.
The new investment will provide Tesla with an additional cash as the company prepares to boost production volume and launch its new Model 3.
Tencent, founded in 1998 by Ma Huateng, is one of largest tech companies in Asia. It is best known for WeChat mobile messaging app.
Tencent has a market capitalization of about $275 billion. The market capitalization of Tesla is $46 billion.
Tencent is bullish on electric vehicle startups. The company was an early investor in NextEV, a Chinese electric vehicle startup which has changed its name to Nio. Tencent also has invested in at least two other Chinese EV startups, including Future Mobility in Shenzhen. Moreover, the Chinese tech giant has funded Didi Chuxing, the world’s second-largest ride services company behind Uber, and Lyft, Uber’s chief rival in the United States.
Earlier this year, Tesla raised about $1.2 billion by selling common shares and convertible debt.
On Tuesday, shares of Tesla Inc (NASDAQ:TSLA) were trading up 2.92%. Year-to-date, the stock is up nearly 30%. During the last 12 months, shares have increased by 20.63%.