Tesla CEO Elon Musk said the company needed an infusion of cash, and it got it, from Tencent, which now holds 5% of Tesla stock.
One of China’s largest technology investment firms has taken a 5% stake in the U.S. battery-electric vehicle manufacturer Tesla.
In a public filing, Tencent Holdings said it has purchased nearly 8.2 million shares of Tesla stock. The automaker’s shares have been on a roller-coaster ride in recent months as the company struggled to fund the development of its critical Model 3 battery sedan.
The automaker’s shares surged on news of the Chinese investment.
Tesla also got a dose of bad news on Tuesday as news reports indicated that one of the maker’s vehicles, operating in semi-autonomous Autopilot mode, struck a motorcycle being driven by a Phoenix police officer. The incident occurred last week, shortly before a separate Arizona crash involving an autonomous vehicle operated by ride-sharing service Uber.
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The $1.78 billion investment by Tencent occurred, in part, through the stock offering Tesla staged earlier this month. That move helped the automaker raise about $1.4 billion – funding that was considered critical to completing the development of the new Model 3 sedan.
Tesla's hurtling toward the launch of the Model 3 and now has a new large investor in the company: Tencent.
The Model 3, which is set to go into production in July, is Tesla’s first mainstream vehicle, and is expected to boost the maker’s volumes dramatically. CEO Elon Musk forecast sales will reach 500,000 in 2018 – about 10 times Tesla’s 2015 sales.
But prior to the latest stock offering, and in light of recent losses, Musk warned that Tesla’s finances were “close to the edge.”
Tencent has not revealed what its plans are for Tesla. The investment company is worth about $300 billion.
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In the case of the Tesla Autopilot crash, the Arizona Republic reported the incident occurred on an exit ramp off the Black Canyon Freeway. An officer had stopped at a red light with a Tesla Model X SUV behind him. The battery-car briefly stopped before starting to creep forward at an estimated 3 mph. The officer jumped off his motorcycle and the Tesla then struck the fallen bike.
There were no injuries or damage, but the incident renews concerns about the safety of testing and operating autonomous and semi-autonomous vehicles on public roads. Also last week, an Uber pilot vehicle was involved in a multi-car crash in the Phoenix suburbs.
The most serious incident involving such technology occurred last May, when a former Navy SEAL was killed in a Florida crash involving a Tesla Model S. Federal investigators later ruled Joshua Brown failed to take control of his vehicle when a truck turned in front of it on a Florida highway.
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Tesla has since said it was going to update its Autopilot system to reduce the risk of using the technology. It is not clear if the vehicle involved in last week’s Phoenix crash had been updated.