Volkswagen, Tesla Merger? VW CEO Clarifies 'No Deal In The Making' With Elon Musk

Renewed talk of a merger between Volkswagen and electric vehicle maker Tesla that surfaced in earnest last year is again making news.

Triggering the latest round of rumors about VW acquiring Tesla is a mysterious meeting last week between VW CEO Herbert Diess and Tesla CEO and co-founder Elon Musk. Diess and Musk met for undisclosed reasons in Braunschweig, Germany, site of VW's auto parts factory.

Musk was in Germany for three days last week for other business, but rumors of a potential VW-Tesla merger were refueled by Musk test-driving VW's new ID.3 EV for the first time. Diess tried to quell speculation by posting a video of the two executives driving an ID.3 on an airfield to his Linkedin page, along with a clarification about their meeting.

“Just to be clear: We just drove the ID.3 and had a chat - there is no deal/cooperation in the making,” wrote Diess in a Linkedin post.

Diess later posted: “Thanks for the visit, Elon! Hope you like the video. It was great driving the ID.3 with you! You were just quite critical with the available torque at higher speed. I told you: “Yes, we are on the runway - but no need for take off - its not a sports car.”

Musk was in Germany checking out the progress in constructing his massive EV factory being built on the outskirts of Berlin. Musk said he made the trip to visit GigaBerlin and Tesla Grohmann Automation. The Tesla's subsidiary is an engineering firm working with the German biotech startup CureVac to develop an "RNA printer" to produce a COVID-19 vaccine.

Musk's visit to Tesla Grohman ignited rumors of a planned Tesla acquisition of CureVac. Musk quickly denied the rumors, as did CureVac's owners. As for VW again broaching its intent to acquire Tesla, Diess said he and Musk never discussed the issue.

Rumors about VW buying Tesla seem to have begun in August 2019 when the German publication Manager Magazin reported Diess' interest in acquiring a stake in Tesla. VW is known to have a deep interest in Tesla's lithium-ion battery technology and software to support its massive expansion into EVs. VW plans to launch 70 EV models across all of its brands (including Porsche) by 2028.

VW quickly denied this buy-in rumor. It said the speculation about buying a stake in Tesla made by Manager Magazin is without merit.

Analysts said a merger would be quite 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.