At least the top management of the German Volkswagen Group has been resolutely on an electric car course for some time, Tesla itself operates from the USA, which practically single-handedly created the market for it. According to its own managers, Volkswagen is still struggling with the software concepts for modern electric cars, while Tesla has problems with quality in production. The heads of both companies, Herbert Diess at Volkswagen and Elon Musk at Tesla, have expressed mutual respect for each other several times. So why don’t the US pioneer and the huge straggler from Germany simply join forces?
Tesla first prey, now hunter
There has apparently already been closer interest from VW on Tesla. When CEO Musk briefly pursued a withdrawal from Tesla in 2018, Volkswagen was said to be ready for co-financing. The Tesla shares then remained on the Nasdaq, and in August 2019 it was said that Volkswagen boss Diess wanted to buy a large part of it. However, Tesla is said to have shown no interest in it, and VW also denied it.
At that time, Tesla’s stock was still around $ 225 – which many considered too expensive. If Volkswagen had struck at that time, for example, a $ 1 billion investment would have turned into more than 6 billion, because Tesla today stands at just under $ 1,500. At the same time, the stock market conditions have reversed vigorously: Since January this year, Tesla’s market capitalization has been higher than that of the huge Volkswagen Group, now by a factor of 4.
If anything, a takeover of Volkswagen by Tesla would be an option today. But it is almost unthinkable for almost the same reasons of ownership as vice versa: Thanks to the special VW law, the state of Lower Saxony has a blocking minority in the German group with which it can stop fundamental decisions. Volkswagen can therefore not change hands without the support of politicians, and given the long history, this cannot be expected for the time being. The majority of shares in VW are also held by Porsche Automobil Holding, which in turn belongs to the Porsche and Piech families.
Volkswagen and Tesla complement each other
But there are other options below a merger or acquisition. At the end of July, Audi chief and VW board member Markus Duesmann admitted that Tesla “surely has a two-year lead” in software and automatic driving. Shortly thereafter, Tesla CEO Musk publicly offered to supply drives and batteries to other automakers and to license software including the autopilot system. According to Duesmann, VW and Audi can now use batteries themselves. But Tesla software could close the gap that the ID.3, for example, has just shown as the first brand-new electric car from the Volkswagen brand.
The other way around, CEO Musk often speaks of the fact that the demand for his electric cars exceeds Tesla’s production capacity despite constant increases. VW could certainly help out here. There is already an agreement with Ford to develop at least one compact electric car on the same platform as the VW ID.3 and its offshoots within the group. This MEB basis is also open to other companies. And Tesla boss Musk recently said that he would like to bring out a compact electric car and an electric city bus earlier, but for now Tesla has his hands full with the other models and gigafactorys.