The Makers of WeChat Just Bought 5 Percent of Tesla

Tesla is already top-of-mind in America when it comes to electric cars, but its future in China was less clear. Even though the Chinese government is focused on dramatically reducing carbon emissions, the common assumption has been that homegrown companies would make the electric cars for China’s drivers.

Enter Tencent Holdings, Ltd. — the makers of WeChat, an immensely popular chat app — which Tesla CEO Elon Musk praised on his much-followed Twitter account on Tuesday: “Glad to have Tencent as an investor and advisor to Tesla,” Musk wrote in response to a Bloomberg story reporting that Tencent had bought 5 percent of Tesla.

Earlier this month, Tesla made $250 million in stock available, a move which was largely seen as a way to raise capital to mass produce its Model 3 of which there are an estimated 350,000 preorders (Tesla won’t release the actual number and even says it’s “anti-selling” the Model 3 due to demand).

Tencent’s investment is an important vote of confidence as Tesla prepares for that launch. The Model 3 will likely face tougher criticism than previous Tesla models due to its lower price, which attracts a new consumer demographic. As an extra boon for Tesla, the endorsement comes from a prestigious source: Tencent — which Musk noted will be an “advisor” to Tesla — is one of the three biggest companies in China alongside Alibaba and Baidu, which has its own ambitious A.I. plans.

Tesla’s stock recently dipped, presumably because investors were doubtful that the company would meet its deadline for launching the Model 3. But the stock’s back up now: it rose three percent after the Tencent announcement, making an 11 percent jump overall in the last five days.

In all, Tencent spent a whopping $1.8 billion on Tesla shares. Elon Musk probably knows just want to do with it.