The Tesla Motors Inc. shares are trading higher after the automaker said Tuesday it is in talks with General Motors Co. for a $5.6 billion buyout of its battery and electric car business.
Tesla said it is not discussing a possible deal at this time.
“We expect GM to be a strong and supportive shareholder, and our board is focused on maximizing shareholder value,” Tesla said in a statement.
Tesla shares rose 4.5% in premarket trading to $738.19.
Shares of Tesla rose 5% to $1,095.19, while General Motors shares gained 4.4% to 4,065.62.
The deal could be worth as much as $1.1 billion to GM.
Tesla and GM are looking to expand their battery business as the technology behind electric cars has grown to include battery packs for cars and SUVs.
Tesla, based in Palo Alto, Calif., is seeking to become a leader in the battery industry by making batteries for vehicles and electric buses.
General Motors has a market value of $46 billion.
Tesla’s stock has gained more than 8% this year, compared with a 2% gain for GM.
GM has a value of about $52 billion.
The two companies are working to build a new joint venture to sell batteries for electric vehicles and autonomous driving.
Tesla has about 100,000 employees worldwide and plans to spend about $1 billion on a battery plant in Nevada.
GM currently makes batteries for its cars.
It said it has also formed a joint venture with Panasonic Corp. for electric-vehicle batteries, and that it is “looking to accelerate the growth of our business in the electric vehicle sector.”
GM and Tesla are also working to expand battery production capacity, which could allow the automakers to produce more batteries for their vehicles, GM said.
Tesla is the world’s largest maker of batteries for cars, trucks and SUVS.
GM, which makes a battery for SUVs, said it had a $1 trillion battery business in 2015.
The automaker plans to invest $50 billion in its batteries business and increase capacity in 2019.
General is planning its own battery business to boost production of batteries in 2019 and 2020.
The company also said it would use $1-billion of the $5 billion it expects to spend on its batteries to invest in infrastructure and manufacturing.
General said it also plans to use $2.5 billion in the $3 billion it plans to pay for an advanced batteries research facility, which will focus on developing more powerful batteries and improving their efficiency.
General and Tesla have been close rivals since the auto makers first started working together in 2001.
In 2007, Tesla sold its auto parts business to General Motors.