Frankfurt: Volkswagen AG is considering a sale of its Bugatti division that would give the maker of 16-cylinder performance vehicles a new lease on life in the electric age.

To help finance the potential deal, VW’s Porsche unit could boost its 15.5 per cent stake in Croatia’s Rimac Automobili to as much as 49 per cent. CAR Magazine reported on the talks between VW and the Croatian producer of battery-powered supercars.

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VW’s supervisory board hasn’t approved the deal and the talks are fluid. Bugatti, which sold 82 vehicles last year, has long been viewed as a prime example of VW’s engineering extravagance. In 1998, it was revived under former Chairman Ferdinand Piech after the brand had largely faded from existence in the 1950s.

Because of high development costs and low volumes, the 16-cylinder Veyron – Bugatti’s first model under VW control – was considered one of the biggest money losers in the auto industry. 

Closer look at portfolio

Bugatti has recently pursued efforts to potentially survive outside the German auto group and head off the risk of being phased out once again. Since the 2015 diesel-cheating scandal, VW has been taking a closer look at its portfolio, with a particular focus on the expensive luxury-car brands amid the growing burden of investing in electric mobility and self-driving technology.

In November, Bugatti boss Stephan Winkelmann described a “hard fight” with its parent to secure funds for an electric four-seater that would flank its 2.5 million euro ($3 million) Chiron supercar. Bloomberg also reported last year that VW was weighing options for the Lamborghini unit.

Bugatti’s potential buyer was founded by Mate Rimac in 2009, with the company’s Concept_One electric supercar debuting two years later. Apart from Porsche, investors in the company include Hyundai Motor Co., Kia Motors Corp. and Chinese battery-maker Camel Group Co.