Tencent buys 5 per cent Tesla stake in AI drive

The Chinese internet conglomerate is bullish on Tesla’s new technologies, including electric cars, assisted driving and shared vehicles, and said that it shares its vision of creating a better future for the planet.

Tencent Holdings Ltd’s investment in electric car maker Tesla Inc, announced on Tuesday, highlights the internet giant’s strategic focus in artificial intelligence-backed applications, notably in the realm of smart vehicles, experts have said.

The Chinese internet conglomerate scooped up 5 per cent of Tesla’s shares for around $1.78 billion to become its fifth-largest shareholder, according to a filing to the United States Securities and Exchange Commission.

Tencent is bullish on Tesla’s new technologies, “including electric cars, assisted driving and shared vehicles”, according to a company statement to China Daily on Wednesday.

The company said its success is partly due to its record of providing capital backing for entrepreneurs, and that Tesla CEO Elon Musk is the archetype for such entrepreneurship.

We share Tesla’s vision in creating a better future for the planet, and look forward to working together as a supportive shareholder.

Martin Lau, vice-president, Tencent

The move comes alongside Tesla raising $1.4 billion in a separate offering of stock and debt, increasing its liquidity to mass produce its new, cheaper Model 3 sedan.

“We share Tesla’s vision in creating a better future for the planet, and look forward to working together as a supportive shareholder,” Martin Lau, a vice-president at Tencent, said in a tweet on Wednesday.

The news sent Tencent shares up 0.885 per cent to HK$228 ($29.34) in Hong Kong on Wednesday. Tesla’s share price was boosted 2.7 per cent in New York a day earlier.

The deal comes after Tencent, a prolific investor in gaming and social networks, expands its presence in the transportation sector. It has invested in China’s largest ride-sharing startup Didi Chuxing, and Shanghai-based electric car developer NextEV.

Tesla and Tencent are likely to work in the development and deployment of technologies in new modes of transportation, from infotainment to autonomous driving, said Lu Zhenwang, head of Shanghai-based Wanqing Consultancy.

Tencent has also stepped up its own AI efforts, setting up a related research lab last year. Its current prowess in the area is exemplified by a championship this month in the strategic game Go, which Google Inc made its mark on when its AI AlphaGo triumphed over world champion Lee See-dol last year.

“The transportation sector is perhaps the first application area to turn AI technologies into tangible products and services,” said Zhang Yun, an analyst at iResearch Consulting Group.

He said Chinese internet giants, including Baidu Inc, Tencent and Alibaba Group Holding Ltd, are investing billions of dollars in autonomous driving.

Alibaba said on Wednesday it would upgrade its machine-learning platform to focus and better empower innovation in the life science and manufacturing sectors.

This story was published with permission from China.org.cn

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