Elon Musk Praises Volkswagen CEO, Fanning Tesla-VW Merger Rumors Again

Looks like previously scotched rumors of a gargantuan, multi-billion dollar Tesla-Volkswagen merger are getting louder, thanks to Tesla CEO Elon Musk.

Rumors about mighty VW buying Tesla first swirled in earnest in late August when the German publication Manager Magazin reported Volkswagen Group CEO Herbert Diess was interested in acquiring a stake in Tesla.

A key reason for this sudden interest is Volkswagen being keen on acquiring Tesla's lithium-ion battery technology and software to support its booming expansion into electric vehicles (EVs). VW plans to launch70 EV models across all of its brands (including Porsche) by 2028. VW quickly denied this buy-in rumor.

“The speculation about buying a stake in Tesla made by Manager Magazin is without merit,” said VW in a statement.

Analysts note a merger would be eminently advantageous for Tesla, which could use a massive capital infusion. Tesla has long been plagued by recurring cash flow problems and a volatile stock price that keeps dismaying investors.

Now, Diess is in deep legal trouble because of the embarrassing "Dieselgate" scandal that continues to tarnish VW's reputation since it erupted in 2015. On Tuesday, Diess, VW chairman Hans Dieter Poetsch, and former CEO Martin Winterkorn were criminally charged by the German government for VW's rampant emissions cheating, which is more popularly called Dieselgate.

On Wednesday, Musk gave Diess his support by tweeting, “Herbert Diess is doing more than any big carmaker to go electric. The good of the world should come first. For what it’s worth, he has my support."

Oddly, Musk trolled VW for its role in Dieselgate a few weeks ago.

Musk's nod to Diess' contributions to advancing EV development is again resurfacing rumors the previously denied talks of a VW-Tesla merger might have more to it that we've been led to believe.

VW owns Volkswagen, Audi, Porsche and a dozen other luxury car brands. The past few years have seen VW invest heavily on EVs as it embraces the reality these vehicles are the only future. VW has said it expects to sell a few million EVs by 2025. This will account for 20 percent to 25 percent of VWs’ total annual sales.

In contrast, Tesla only sold 240,000 EVs worldwide in 2018.

Tesla and Volkswagen have yet to release new statements about the rumored merger. Until then, all talks are plain rumors.