Large Chinese internet and auto manufacturing companies join to produce internet-connected cars

The Chinese company Tencent Holdings has teamed up with the Guangzhou Automobile Group to collaborate on producing internet-connected cars. Guangzhou Auto shares surged on the announcement.

Tencent Holdings has subsidiaries who provide media, entertainment, payment systems, smart phones, and online advertising services in China. Tencent is one of the largest internet companies and the largest gaming company on the globe. In China it operates the instant messaging servce Tencent QQ, and mobile chat service WeChat. It also owns a majority in Tencent Music which has more than 600 million active users, the world's largest music service.

The Guangzhou Automobile Group (GAC) was the sixth largest automaker in China in 2009. It manufactures Honda products in a joint venture with the Japanese automaker. In all, it has five foreign partners that allow the company to produce FIats, Isuzu, Mitsubishi and Toyota but the company also produces other brands.

The development of fast-changing auto technology including connected cars has led to internet companies striking deals with automakers. Earlier, in 2017, Tencent bought 5 percent of Tesla the prime US electric car manufacturer for the sum of $1.78 billion.

Tencent and the auto manufacturer will collaborate to produce internet connected cars and AI-aided driving. They will also explore investment in auto-related e-commerce and auto insurance according to Guangzhou Auto. Connected cars are equipped with internet access, and also usually with a local area network that allows the car to share internet access with other devices both inside and outside the vehicle. Often the car will have other technologies as well such as safety applications using the internet and other apps that can benefit drivers.

Guangzhou Auto said that it would be able to tap into Tencent's expertise on mobile payments, social networking, and artificial intelligence. Tencent will also provide cloud services as well as other technical support. Both companies saw their share prices rise after the announcement. Chinese e-commerce giant Alibaba already has teamed up with the Shanghai auto manufacturer SAIC Motor Company and Baidu has been developing self-driving cars. Baidu is one of the world's largest internet companies headquartered in Beijing. Tencent is a latecomer in linking up to the auto industry. In Canada, Rogersoffers a connected car device.