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Speculations on Volkswagen’s interest in taking a stake in Tesla have worked to the advantage of the U.S. electric car maker. Tesla’s shares rose briefly with 2%, following a report in German magazine Manager Magazin, which reported about Herbert Diess interest in Tesla. The published article further reported on regular meetings between V.W.’s CEO and Tesla CEO Elon Musk in what seemed like efforts to strike the deal.

However, through its spokesman Pietro Zollino, Volkswagen has denied the report, referring to them as unfounded speculations.

But Tesla is exploring locations in Europe for a new Gigafactory

Tesla is on record for being the U.S. carmaker’s expertise in areas of software and battery design. If the Manager Magazin’s report is anything to go by, Volkswagen would have such an abundant opportunity of tapping into Tesla’s technological expertise. Nonetheless, a financial advisor close to Volkswagen says that the company can’t put in $30 billion (27 billion euros) in buying Tesla.

Meanwhile, despite the speculation, Tesla is seriously exploring new locations in Europe to out up a Gigafactory. According to some company executives, a European facility would boost growth and expansion of the available market. This would, in return, help in reducing transportation costs and tariffs. It is worth noting that the European Market is at a point where it is just embracing electric vehicles.

The U.S. carmaker had identified a location in Lower Saxony, Germany, and which is so close to V.W.’s headquarters. Whether or not Tesla would establish a relationship with V.W. remains unclear given that it has previously enjoyed close relations with other manufacturers.

Volkswagen has correspondingly struck agreements with other manufacturers

There would be nothing new in Volkswagen striking a deal with Tesla. This is because V.W. has earlier struck similar deals with various manufacturers in helping them build and improve battery-electric vehicles. One such deal was with Rimac, a Croatian company and in from which V.W.’s Porsche brand is taking 10% stake.

The most recent agreement, whose focus is on battery-car technology was with Ford. As Ford pursues the building of all-electric products in Europe, it will use V.W.’s modular MEB platform.