(Bloomberg) -- There appears to be a budding bromance between the CEOs of Volkswagen AG, the world’s largest automaker, and Tesla Inc., the electric-car company suddenly back on the ascent.
At an event where VW was presenting the new Golf hatchback late Thursday, Chief Executive Officer Herbert Diess quibbled with reporters who suggested Tesla is in trouble because it’s too small.
“Tesla is not niche,” Diess said in Wolfsburg, Germany, where VW is based. “The Model 3 is a large-series model and they are one of the biggest manufacturers of electric-car batteries.”
“We have a lot of respect for Tesla,” Diess continued. “It’s a competitor we take very seriously.”
Diess, 61, jumped to Musk’s defense on a day the billionaire needed little help dispelling doubters. Tesla shares soared 18% Thursday -- the biggest jump in 6 1/2 years -- following a surprise quarterly profit report. The rally vaulted the company back above General Motors Co. as the top U.S. automaker by market capitalization.
The words of praise may have been a response in kind to Musk, 48, who tweeted last month that Diess was “doing more than any big carmaker to go electric.” Four years after VW admitted to cheating on diesel emissions tests -- a scandal that has cost the company more than $30 billion -- it’s committed to spend almost $50 billion on electric vehicles.
The key question for Tesla’s planned global expansion is whether capital markets continue to provide funding for its growing operations, Diess said.
“Scaling up globally is difficult,” he said. “The car industry is very capital intense, and electric cars make it even more capital intense.”
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