Tesla shares drop after Daimler sells 4% stake

Tesla Motors shares dropped Tuesday after Daimler said it had sold its roughly four-percent stake in the US electric carmaker, but would continue their partnership.

The sale of the stake in Tesla will result in a cash inflow of around $780 million, which will be used to strengthen Daimler's operational business, the German company said in a statement after Wall Street markets closed, calling Tesla "a bold partner."

Tesla, which had gained 2.1 percent in a sharp 2.4 percent rally on the Nasdaq Stock Exchange, fell 1.1 percent to $232.82 in after-hours trade.

"We are convinced that this powerful electric vehicle for every day use will appeal to a lot of customers," said Dieter Zetsche, Daimler's chairman and head of Mercedes-Benz Cars.

"Our partnership with Tesla is very successful and will be continued," he added.

Bodo Uebber, a member of the Daimler board, said: "We are extremely satisfied with the development of our investment in Tesla, but it is not necessary for our partnership and cooperation.

"For this reason, we have decided to divest of our shares. This will also allow Tesla to broaden its investor base."