Tencent Holdings Ltd. has signed a strategic partnership agreement with Guangzhou Automobile Group Co., Ltd. to discuss possible cooperation in automobile e-commerce, automobile insurance and new energy vehicles, according to a statement issued by Guangzhou Automobile Group.
The agreement with Guangzhou Automobile Group, whose shares traded on Hong Kong and Shanghai stock exchanges soared on the news, indicates Tencent’s intention to break into the broad automotive ecosystem in a more prominent way. The announcement came after Tencent bought a 5% stake of U.S. electric car maker Tesla Inc for roughly US$1.78 billion earlier this year.
Guangzhou Automobile has developed a supply chain covering research and development, whole vehicle and vehicle parts manufacturing, as well as business and financial services. The company also owns an automobile e-commerce platform called DS.cn and an automobile insurance provider Urtrust Insurance Co, Ltd.
In 2015, Tencent partnered with Taiwan’s Hon Hai Precision Industry Co., Ltd., also known as Foxconn Technology Group, to invest in EV start-up Future Mobility Corp., a company founded by Carsten Breitfeld, formerly vice president at BMW Group, and Daniel Kirchert, ex-managing director at Infiniti China. But Tencent and Foxconn withdrew from the investment later for reasons that have not been made public.
China’s two other Internet giants, Baidu and Alibaba, are also making strategic investments in the automobile market. The connected vehicles are expected to be the next important battle field for technology companies to compete on everything from operating systems, content distribution, entertainment, smart devices and more.
Baidu has said it plans to roll out a partially self-driving car by the second half of 2019 with its new partner, Chinese state-owned car maker Anhui Jianghuai Automobile (JAC). Baidu is also pushing to have more car makers utilize its Apollo autonomous driving platform.
In 2015, Alibaba and Chinese automaker SAIC Motor Corp Ltd. jointly developed an operating system for connected vehicles called YunOS for Car. The Roewe RX5, a compact SUV made by SAIC Motor was introduced as the first connected car powered by the YunOS in 2016.