DUBAI, United Arab Emirates (AP) -- The Abu Dhabi investment fund that is Daimler's largest shareholder has bought about 4 percent of electric car producer Tesla Motors, deepening the oil-rich Arab state's push into green technology.
Aabar Investments and German automaker Daimler GM announced the deal Monday. Under the terms of the agreement, Aabar will take over two-fifths of Daimler's approximately 10 percent stake in Tesla. Financial terms were not disclosed.
Aabar, a public-private investment vehicle controlled by the Abu Dhabi government, bought 9.1 percent of Mercedes-Benz maker Daimler in March. The company's chairman, Khadem al-Qubaisi, said focusing on electric vehicle development and other projects aimed at reducing carbon emissions was one of several areas where the companies had agreed to cooperate.
"Our joint involvement with Daimler in Tesla is completely in line with this strategy, and marks an important step in the continuing development of our partnership," al-Qubaisi said.
Stuttgart-based Daimler, the maker of Mercedes-Benz vehicles, acquired almost 10 percent of Tesla in May. That deal included an agreement for the companies to work together on battery systems and electric drive trains.
Daimler has been testing a fleet of electric-powered Smart fortwo cars in London and plans to start production of up to 1,000 of the cars at its assembly plant in Hambach, France, later this year.
The emirate of Abu Dhabi, the largest and wealthiest of the seven United Arab Emirates, is increasingly using its oil wealth to position itself as a clean energy center.
The sheikdom, which also serves as the UAE capital, is spending billions of petrodollars to build a self-contained carbon-neutral district known as Masdar City. Inside the solar-powered community, developers promise that cars will be banned, garbage will be recycled and waste water will be reused.
The emirate has also outlined plans to boost its overall reliance on renewable energy and recently was picked to host the headquarters of the International Renewable Energy Agency.
San Carlos, Calif.-based Tesla remains a niche carmaker in the U.S. and has yet to turn a profit on its much-touted Roadster electric sports car, which carries a sticker price of $109,000. However, the U.S. Energy Department last month announced Tesla would get $465 million in loans to engineer and build its next-generation electric vehicle, the Model S sedan. Nissan Motor Co. and Ford Motor Co. were also awarded loans.
Tesla has said it will use $365 million for production engineering and the assembly of the Model S. It will use $100 million for a California power train manufacturing plant expected to employ 650 workers.
The Model S is expected to go on sale in late 2011 and is expected to carry up to seven people and travel as far as 300 miles (480 kilometers) on a charge. Tesla has said it expects to price the Model S at $49,900 after a $7,500 federal electric car rebate.
Tesla spokeswoman Rachel Konrad said the electric car maker welcomed Aabar's investment, which is not expected to affect the company's existing partnership with Daimler.
"This investment is consistent with the announcements made by Daimler and Aabar earlier on (of) their intention to jointly work on strategic initiatives, including the development of electric vehicles," she said.
AP Auto Writer Dan Strumpf in New York contributed to this report.