Tesla discloses that Chinese holding firm Tencent acquired a total 5% stake in the company

Tesla’s stock was up 3% this morning in pre-market trading after the company disclosed through a SEC filing that Tencent, a giant Chinese holding firm, has been accumulating stock in the electric car company for a total 5% passive stake worth over $2.2 billion at the current price.

Tesla CEO Elon Musk said that he is “glad to have Tencent as an investor and advisor to Tesla.”

The company has been purchasing stock following Tesla’s latest stock offering earlier this month, which likely facilitated the offering. It paid ~$1.8 billion for the entire stake on the open market.

They wrote in the SEC filing released this morning:

The 8,167,544 shares of Issuer common stock were acquired by the reporting persons in a registered offering of common stock by the Issuer on March 17, 2017 and through open market purchases, for an aggregate purchase price of $1,777,842,836 (including commission).

Tesla isn’t Tencent’s first big investment in electric vehicles – though it could be its biggest so far in the field.

We have already reported that the Chinese holding firm has already been backing NIO, formerly known as Next EV, a  global electric and autonomous vehicle startup which reportedly just raised $600 million.

They have also been backing another electric vehicle startup called Future Mobility Corp, which poached executives from Tesla last year and is reportedly backed by Foxconn.

Tencent’s headquarters are based in Shenzhen and it is best known for owning large stakes in several important Chinese tech services, like WeChat, JD.com, and internationally through its video game companies, like Riot Games, SuperCell, and others.

While it’s early to say, the new minority owner could help Tesla establish a manufacturing presence in China for the domestic market. It’s something the company has been talking about for a while and it was supposed to announce a partnership last year, but it didn’t happen.

Tesla tripled its sales in China in 2016 to over $1 billion and the government recently opened the doors for Tesla and other foreign automakers to produce electric vehicles in the country by relaxing its strict rules for joint-venture in domestic production.