A German business publication reported on Thursday that Volkswagen (VLKAY) CEO Herbert Diess is interested in acquiring a stake in Tesla (TSLA) - Get Report , citing company sources. But a spokesperson for Volkswagen has denied the report, according to Reuters.

Shares of Tesla initially rose on the news of Volkswagen's interest on Thursday morning, but were lately falling 0.6% to $219.55.

"Diess would go in right away if he could," Manager Magazin quoted one of Diess' top managers as saying.

The magazine said that Diess believes Volkswagen could profit from Tesla's competence in the fields of batteries and software, the magazine wrote, adding the German company had enough money. 

Acquiring a stake would be sufficient for a start, the report said.

Traditionally foes, automakers have more recently been either partnering or discussing partnering with one another in bids to not only remain competitive but also to prep for what many see as the inevitable evolution to electric vehicles. Volkswagen and Ford (F) - Get Report  have also discussed stepping up their alliance and collaboration efforts.

Meantime, slipping sales of Tesla's more expensive Model S and X vehicles have pointed to the electric car maker losing out to competitors, especially in Europe.

Alliance Bernstein's Toni Sacconaghi wrote in a note Tuesday that sales of the luxury sedan Model S and luxury crossover Model X models have fallen considerably in the past two quarters, from a quarterly rate of between 20,000 and 25,000 vehicles to just 14,000. 

Save 57% With Our Labor Day Sale. Join Jim Cramer's Action Alerts PLUS investment club to become a smarter investor! Click here to sign up