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Tesla and Volkswagen: from fierce competitors to unlikely allies
Tesla and Volkswagen have established themselves as unlikely allies in the world of turning vehicles toward electrification. However, the two companies did not always see eye to eye, but the tides have certainly changed. Evidence of this comes just a day after Elon Musk took an unexpected stop in Western Germany to see Volkswagen Chairman Herbert Diess.
Years ago, Volkswagen and Tesla were sitting at opposite ends of the spectrum. One company was a well-established marvel of German automotive manufacturing, while the other was struggling to rally enough capital to keep its own production efforts moving forward.
However, 2020 has given the two companies and effective dose of the “Freaky Friday” treatment, where the former automaker is struggling to keep functioning EVs on the road. Meanwhile, the latter is surging forward the charge to electrification and maintains a healthy lead over other companies that are attempting to follow in their steps.
But from 2008 to 2015, Volkswagen was far from ever being considered a Tesla ally. The German automaker was violating the EPA’s Clean Air Act by knowingly placing cheat devices in their car’s emissions systems. The scandal, known as Dieselgate, set a semi-permanent mark in the minds of the environmentally-conscious.
Many swore never to consider repurchasing a Volkswagen vehicle, but the company has won some prominent figures in the EV community. Most notably, Elon Musk. But the relationship wasn’t always healthy.
Musk was critical of a conspiracy that a Volkswagen employee was criticizing Tesla through a fake name. According to numerous sources, Diess had the situation handled, but the drama between the two companies didn’t necessarily end there.
Dieselgate was still slightly in the head of Musk. The CEO mentioned that Tesla’s HEPA grade filter was needed while sitting in close traffic because toxic tailpipe emissions could affect the air quality of those who occupy vehicles that are around. “Good thing gas/diesel carmakers didn’t cheat on their emissions or we’d be in real trouble,” Musk joked, indirectly taking a jab at Volkswagen’s wrongdoing.
In close traffic, poisonous gas spewing from the car in front of you goes straight into your AC intake. Good thing gas/diesel carmakers didn’t cheat on their emissions or we’d be in real trouble 😅
— Elon Musk (@elonmusk) September 4, 2019
However, Musk has recognized that Diess is an ally and is driving Volkswagen toward electrification. The Tesla CEO even said that Diess is “doing more than any big carmaker to go electric. For what it’s worth, he has my support.”
Musk and Diess then appeared on stage together at the Golden Steering Wheel Awards in Berlin last November, trading compliments and smiling from ear to ear with encouragement. The two had shown their business ventures had resulted in a healthy friendship, and Musk even announced that Tesla would be bringing a new facility to Berlin on the same evening.
In early September 2020, Musk flew to Germany to conduct business. His final stop on his quick tour of the country was to pay his friend Diess a brief visit, where Musk drove the ID.3 from Volkswagen and took a peek at the Model Y’s competition in the ID.4. With Giga Berlin moving along swiftly and Tesla intending to start manufacturing vehicles in July 2021, it would seem that Diess would want to keep a competitor at bay and not reveal his plans for an electric car. But he was more than willing to show Musk around. Why?
While company collaborations are rare in the automotive sector, a Tesla and Volkswagen one wouldn’t be a far-fetched idea. The two companies have executives that are more than willing to show their products to each other, and the two could also help each other in improving their businesses. Volkswagen has been building cars in Germany since 1937. Eighty-five years of market data could help Tesla make an enormous impact on the German market, and Volkswagen could undoubtedly share some hints if Tesla required them.
Meanwhile, Volkswagen has had a very public problem with its MEB infrastructure within the ID family of cars. Tesla, on the other hand, has established itself as the most prominent figure in terms of software and EV tech, and it could always lend a helping hand to Volkswagen, especially considering Musk is more than willing to help electrified fleets come to life. “Tesla is open to licensing software and supplying powertrains & batteries,” Musk said to Teslarati In July. “We’re just trying to accelerate sustainable energy, not crush competitors!
Whether the two companies decide to help, each other remains to be seen. But, the partnership will help both Tesla and Volkswagen out, and in the big picture, enable the acceleration to sustainable energy to occur faster.
Elon Musk
Elon Musk teases massive new Tesla-xAI joint project known as ‘Digital Optimus’
It is the latest move by a Musk company to automate, streamline, and reduce the manual, monotonous, and tedious work currently performed by humans through AI and robotics development. Digital Optimus will be capable of processing and actioning the past five seconds of a real-time computer screen video and keyboard and mouse actions.
Elon Musk teased a massive new project, to be developed jointly by Tesla and xAI, called “Digital Optimus” or “Macrohard,” the first development under Tesla’s investment agreement with xAI.
Musk announced on X that Digital Optimus will “be capable of emulating the function of entire companies.”
Macrohard or Digital Optimus is a joint xAI-Tesla project, coming as part of Tesla’s investment agreement with xAI.
Grok is the master conductor/navigator with deep understanding of the world to direct digital Optimus, which is processing and actioning the past 5 secs of…
— Elon Musk (@elonmusk) March 11, 2026
It is the latest move by a Musk company to automate, streamline, and reduce the manual, monotonous, and tedious work currently performed by humans through AI and robotics development. Digital Optimus will be capable of processing and actioning the past five seconds of a real-time computer screen video and keyboard and mouse actions.
Essentially, it will be an AI version of a desk worker in many capacities, including accounting, HR tasks, and others.
Musk said:
“Grok is the master conductor/navigator with deep understanding of the world to direct digital Optimus, which is processing and actioning the past 5 secs of real-time computer screen video and keyboard/mouse actions. Grok is like a much more advanced and sophisticated version of turn-by-turn navigation software. You can think of it as Digital Optimus AI being System 1 (instinctive part of the mind) and Grok being System 2. (thinking part of the mind).”
Its key applications would be used for enterprise automation, simulating entire companies, high-volume repetitive tasks, and potentially, future hybrid use with the Optimus robot, which would handle physical tasks, while Digital Optimus would handle the clerical work.
The creation of a digital AI suite like Digital Optimus would help companies save time and money, as well as become more efficient in their operations through massive scalability. However, there will undoubtedly be concerns from people who are skeptical of a fully-integrated AI workhorse like this one.
From an energy consumption perspective and just a general concern for the human workforce, these types of AI projects are polarizing in nature.
However, Digital Optimus would be a great digital counterpart to Tesla’s physical Optimus robot, as it would be a hyper-efficient addition to any company that is looking for more production for less cost.
Musk maintains that there is no other company on Earth that will be able to do this.
Elon Musk
Tesla China posts strong February wholesale growth at Gigafactory Shanghai
The update was shared by Tesla observers on social media platform X, citing monthly China Passenger Car Association (CPCA) data.
Tesla China sold 58,599 vehicles wholesale in February, reflecting strong year-over-year growth. The figure includes both domestic deliveries in China and vehicles exported to international markets.
The update was shared by Tesla observers on social media platform X, citing monthly China Passenger Car Association (CPCA) data.
Tesla’s February wholesale result represents a 91% increase year over year, compared with 30,688 vehicles in February 2025. Month over month, the result was down 15.2% from January, when Tesla China recorded 69,129 wholesale units.
The February total reflects combined sales of the Model 3 and Model Y produced at Gigafactory Shanghai. The facility produces the two vehicles for both domestic sales and exports.
Gigafactory Shanghai continues to serve as Tesla’s primary vehicle export hub, supplying vehicles to markets across Asia and Europe. Data compiled by Tesla watchers shows that 18,485 vehicles were sold domestically in China in January 2026, while exports accounted for 50,644 units during the same period.
Tesla has also been extending financing programs in China as it pushes to strengthen domestic demand. The company recently extended its seven-year ultra-low-interest and five-year interest-free financing programs through March 31, marking the second extension of the promotion this year.
The financing initiative was first introduced on January 6 as a strategy aimed at offsetting higher ownership costs ahead of China’s planned 5% NEV purchase tax in 2026. The promotion was originally scheduled to expire at the end of January before being extended to February and then again through the end of the first quarter.
Tesla’s efforts come amid growing competition in China’s EV market. According to data compiled by CNEV Post, Tesla’s 2025 retail sales in China reached 625,698 vehicles, representing a 4.78% year-over-year decline. Part of that decline was linked to the Model Y changeover to its updated variant in early 2025, which temporarily reduced deliveries during the transition period.
News
Tesla Model Y L spotted on transport trucks in Australia
One of the sightings was reported along Victoria Parade in Melbourne, and it showed multiple Model Y L vehicles on a transport carrier.
Tesla’s upcoming Model Y L has been spotted on transport trucks in Australia. Sightings of the six-seat extended wheelbase Model Y variant have been reported on social media platform X by members of the Australian Tesla community.
One of the sightings was reported along Victoria Parade in Melbourne, and it showed multiple Model Y L vehicles on a transport carrier.
The sighting follows earlier observations by Tesla enthusiasts in Sydney, where a covered vehicle believed to be a Model Y L was spotted at a Supercharger.
The Sydney sighting drew attention after observers noted that the vehicle’s tare weight appeared to match the ADR approval listing for the Model Y L, suggesting it could indeed be the extended wheelbase variant of the electric SUV.
Tesla has previously confirmed that the Model Y L will launch in Australia and New Zealand in 2026. The confirmation was reported by techAU following a media release from Tesla Australia and New Zealand.
The Model Y L expands the existing Model Y lineup with seating for six passengers. The vehicle features a longer body compared with the standard Model Y in order to accommodate a spacious second and third row.
Tesla has opted for a 2-2-2 seating configuration instead of a traditional seven-seat layout for the Model Y L. The design includes two individual seats in the middle row to provide easier access to the third row and additional passenger space.
Tesla Australia and New Zealand has also stated that the Model Y L will be covered under the company’s updated warranty structure beginning in 2026.
Tesla has not yet announced pricing or official range figures for the Model Y L in Australia.
Elon Musk teases massive new Tesla-xAI joint project known as ‘Digital Optimus’
Tesla China posts strong February wholesale growth at Gigafactory Shanghai
