Visitors look at a Tesla Model S electric car on display at the Beijing International Automotive Exhibition in Beijing last year: The electric car marker is yet to crack the Chinese market. Credit:Mark Schiefelbein While the company has been getting better traction -- revenue from China tripled last year to more than $US1 billion -- sales from the market were still less than a quarter of what Tesla made in the US. Tencent's purchase vaults the company to the position of Tesla's fifth-largest shareholder just as Musk prepares to start production of his mass-market Model 3 later this year, and as Tesla scouts for additional "gigafactories" that would further boost battery production. In buying the Tesla stake, Tencent is adding to existing investments in technologies that are reshaping the auto industry and the future of mobility, including ride-hailing apps and the maps and artificial intelligence needed for driverless cars. "Having Tencent as a partner helps position Tesla to launch the Model 3 in China," said Joseph Fath, a fund manager at T. Rowe Price, Tesla's fourth-largest shareholder. "Tencent is one of the three superpowers in China along with Baidu and Alibaba, and they clearly have a lot of backing from the government."

Tesla chief Elon Musk just gained a massive and well-connected confidant. Credit:Bloomberg Tencent purchased Tesla shares on the open market and from Tesla's stock offering earlier this month, according to a regulatory filing. The sale of equity and debt padded Tesla's coffers as Musk spends heavily on introducing the lower-priced Model 3. Tencent Chairman Ma Huateng said earlier this month he envisions Tencent developing AI technology for driverless cars in the future. The Shenzhen-based company is one of the biggest investors in Chinese ride-sharing giant Didi Chuxing and owns stakes in mapmakers NavInfo and HERE, the German consortium owned by carmakers BMW, Audi and Daimler. Bets on electric cars In getting behind Tesla, Tencent also is adding to existing bets on electric cars. It was an early backer of Nio, the startup owned by Chinese internet entrepreneur William Li and originally called NextEV. Nio's US headquarters are in San Jose, California and the company has vowed to bring a plug-in autonomous car to the US market by 2020.

While Tencent has cooperated with companies it has invested in previously, there are no detailed plans for cooperation with Tesla at the moment, according to an emailed statement. "Elon Musk is the archetype for entrepreneurship, combining vision, ambition, and execution," Tencent said in the email. "Tesla is a global pioneer at the forefront of new technologies including electric vehicles, assisted driving, shared vehicles, digitising real-world information, sustainable energy generation and scalable energy storage." Shares of Palo Alto, California-based Tesla rose 2.7 per cent to close at $US277.45. The stock's record closing price was $US286.04 in September 2014. Tencent touched the highest intraday price since its June 2004 initial share sale and traded at HK$228 in midmorning in Hong Kong. Tesla has several stores in China's largest cities, including Beijing, Shanghai, and Guangzhou. Musk, 45, has fought the perception that it's difficult to charge one's car in China and is expanding Tesla's network of superchargers and "destination" stations at hotels, restaurants, shopping centres and other locations. "Tencent's philosophy is to just invest in the best companies in the world," David Chao, the co-founder of venture-capital firm DCM, said in a text message.

Tesla and Tencent could create WeChat fan pages and communities to boost the company's brand in China and integrate the app into Tesla cars, Chao said. "There are so many connections. It makes a lot of sense." Tesla currently makes the Model S sedan and the Model X sport utility vehicle, which comes with an in-car HEPA air-filter system. While Tesla doesn't release shipments by market, researcher JL Warren Capital says the company exported 1356 vehicles to China during the first two months of 2017, nearly four times more than the year-earlier period. Musk unveiled the Model 3 in March 2016 at a late-night party in Los Angeles. About 373,000 pre-orders were placed for the car, unseen by most buyers, including thousands who stood in long lines or camped out overnight at stores. Loading "Very few" Model 3 orders have been placed in China so far because the company has yet to launch the car in China or Europe, Musk said in a tweet on Tuesday.

Bloomberg