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Chinese tech titan Tencent buys 5 percent of Tesla

That slice of the pie cost Tencent more than $1 billion.

Charger with Tesla logo at a Supercharger rapid battery charging station for the electric vehicle company Tesla Motors, in the Silicon Valley town of Mountain View, California, August 24, 2016. (Photo by Smith Collection/Gado/Getty Images).
Smith Collection/Gado/Getty Images

Elon Musk might be Tesla's top shareholder, but he's not the only big fish in this pond.

Chinese tech firm Tencent has invested $1.78 billion in the electric car manufacturer, in exchange for a 5 percent stake in the company. It is perhaps best known for WeChat, China's most prominent chat application.

Tencent has investments in a number of sectors, ranging from gaming to financing. It was an early investor in Snap, and it's invested in other, smaller auto companies, as well, including NextEV, which is now known as Nio. It also owns Riot Games, the developer of League of Legends.

While we may have fun imagining the wacky things Tencent would do with Tesla, it appears that this is nothing more than a routine investment.

Jim Dyson/Getty Images

Tesla declined to comment, and Tencent didn't immediately return a request for comment. According to a Roadshow source close to the matter, however, Tesla and Tencent do not have a business relationship, nor are there any plans to cooperate at the moment.

The source also says Tencent is filing a Schedule 13G with the US Securities and Exchange Commission, and as per the requirements of the schedule filing, Tencent must remain a passive investor with no intent to control or influence the company. Thus, Tencent is likely just investing in Tesla because it believes there's a profit to be had.

Tencent's money comes at an excellent time for Tesla. The automaker is in the midst of raising capital for the planned rollout of the Model 3, the company's first "affordable" car with a base price under $40,000, prior to any EV tax incentives. It's believed to pack a range between 200 and 300 miles, with a look similar to the Model S, albeit smaller and with a more spartan interior.

This acquisition means Tencent is one of the largest stakeholders in Tesla, but CEO Elon Musk remains top dog with about 21 percent of the company's shares.

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