How Tesla's Musk tried and failed to tempt VW's Diess to run EV maker

Herbert Diess was visibly proud when he presented the new Volkswagen ID3 to Tesla CEO Elon Musk seven months ago.

During a visit to Germany last year, Musk went to Brunswick in VW's home state of Lower Saxony to test the ID3, the German automaker's new Golf-sized full-electric hatchback. The ID3 is the first of a new generation of VW Group battery-powered cars with which the company aims to topple Tesla as the global EV sales leader.

Diess posted a selfie of himself and Musk after the event. Musk praised the ID3, and Diess beamed.

The mutual esteem has apparently existed for some time -- in 2015, Musk tried to poach Diess, who was then BMW's head of development -- to become CEO of Tesla.

Diess declined Musk's offer and instead joined VW as a management board member on July 1, 2015. Diess became VW's CEO in 2018.

Musk's offer was first reported by Business Insider on Tuesday. Sources with knowledge of the matter confirmed the report to Automobilwoche, a sister publication of Automotive News Europe, and to the German business daily Handelsblatt.

Tesla had already drawn up a contract for Diess that was ready to be signed, the sources said.

Musk wanted to hand over the CEO post to Diess so that he could concentrate on his role as Tesla chairman. At the time, the Tesla founder was still performing both functions.

Already at BMW, Diess was one of the biggest advocates of electric mobility and a supporter of the automaker's Project i, which launched the i3 full-electric hatchback in 2013 and i8 plug-in hybrid sports car a year later.

As early as 2008, when he was BMW's chief procurement officer, Diess had said: "Electric drive is a core competence that we will not let go of."

Diess also said: "The i3 and i8 are the spearheads with which BMW is entering the new age."

His comments apparently attracted the attention of Musk.

However, to the outside world, Musk was not impressed by the i3. "I'm glad to see BMW launching an electric car," he said after the i3's launch when he was presenting Tesla's quarterly figures. "That's cool."

And then added pointedly, "There's still room for improvement with the i3, and I hope they do." He then broke into a fit of laughter.

Diess had ambitious plans to rapidly expand BMW's i fleet. But he was unable to get board approval. After the slow sales start of the i3, there were more and more doubters in the company. Diess wanted to expand the "i" lineup with the larger i5 to challenge the Tesla Model S. According to Automobilwoche sources, the i5, which was already almost finished, was dropped after Diess left the BMW board.

Diess had planned a pure electric vehicle with a high content of lightweight carbon. Several prototypes were shown to the management board, but they were rejected again and again as too costly. It was only at VW that Diess was able to realize his ambitious electric plans.

BMW now plans to launch an i5 electric sedan based on a modified combustion engine platform in 2023 or 2024.