Volkswagen Says Report Of Interest In Investing In Tesla Is ‘Completely Unfounded’

Volkswagen denied a report Thursday that it has any interest in taking a stake in U.S. electric car maker Tesla.

“It’s completely unfounded. It’s pure speculation,” Volkswagen spokesman Pietro Zollino said of a report in German magazine Manager Magazin that said VW CEO Herbert Diess was eyeing Tesla.

Tesla’s shares briefly inched higher after Reuters published an article summarizing the magazine before falling after VW denied the report.

While Germany’s Volkswagen may not want to invest in Tesla, the U.S. carmaker has been scouting locations in Europe for a new Gigafactory there.

Executives at Tesla, which didn’t immediately comment on this story, have said a European facility will help lower transportation costs, avoid tariffs and expand availability in a market just beginning to embrace electric vehicles. Norway now sells more battery-powered vehicles than those using gas or diesel, and Tesla is the market’s number one supplier.

CEO Elon Musk told investors in a July 24 conference call the company would finalize its location for a European Gigafactory before the end of the year with hopes to have it up and running by 2021.

Two auto industry executives close to Tesla or Volkswagen, who asked not to be identified, said the California-based automaker is currently looking for a factory site in Germany.

Tesla has reportedly scouted out Lower Saxony, Germany, close to VW’s headquarters and its largest manufacturing operations, according to one of the people, who lives in Europe. Though labor costs are high, he said the location would provide Tesla with “cheap and renewable energy.”

Germany’s Manager Magazin had reported early Thursday that Volkswagen was looking to acquire a stake in Tesla as a way to access the U.S. manufacturer’s technology. VW is in the midst of an aggressive roll-out of battery-electric vehicles, starting with the Audi e-tron it launched this year, with dozens more products to come by mid-decade. But it has also been developing alliances, including one with Ford Motor Co., that could help reduce costs and give it access to new technologies.

“Diess would go in right away if he could,” the German magazine reported, quoting an unidentified senior VW manager.

According to the publication, Diess has been meeting regularly with his counterpart at Tesla, though Musk had so far rebuffed an interest in striking an alliance.

Volkswagen categorically denied the report.

Whether Tesla would be interested in a tie-up with Volkswagen or not is unclear. The company has worked closely with other manufacturers in the past, including both German’s Daimler and Japan’s Toyota.

Tesla’s relationship with the Japanese giant was formed in May 2010, a month before Tesla’s IPO. Toyota purchased $50 million in stock and agreed to cooperate on battery-car development. Tesla provided the electric drivetrain for a short-lived EV version of the Toyota RAV4 that debuted in 2012. But the Japanese company subsequently announced the formation of its own EV program without Tesla.

In June of 2016, Toyota said it held 2.3 million shares of Tesla stock, as of the end of the prior quarter, valuing its holdings at $538 million. It quietly sold off those holdings later that year.

Perhaps the longest-lasting legacy of the deal is Tesla’s Fremont, California, assembly plant. The factory was originally built by General Motors and then became part of the Detroit automaker’s own joint venture with Toyota. GM abandoned the deal when it filed for bankruptcy, leaving Toyota the sole owner before shutting the factory down. Tesla bought it in 2010.

Daimler took a nearly 10% stake in Tesla in May 2009, giving the German manufacturer Tesla’s expertise on several projects, notably the development of the first-generation Mercedes B-Class electric vehicle.

But the German automaker sold off its stake for a gain of nearly $800 million in October 2014, a move that recently retired Daimler CEO Dieter Zetsche said, at the time, “I did not regret…for a moment.” Last October, however, Zetsche told Polish newspaper Rzeczpospolita that some sort of future relationship could again be possible.

Volkswagen has similarly struck deals with other manufacturers to help develop and build battery-electric vehicles. That includes Rimac which builds battery-electric supercars. VW’s Porsche brand took a 10% stake in the Croatian company last year for an unspecified price.

In July, VW also added a new alliance with Ford — one of three ventures they now cooperate on — focusing on battery-car technology. Among other things, Ford will use VW’s modular MEB platform for all-electric products it plans to build in Europe.

At the time the deal was announced, officials from both Ford and VW stressed that it did not preclude them from forming additional tie-ups independently.