Tesla's stock was up 0.6% by market close on Thursday, lifting its market cap more than $200 million to $39.8 billion.
Volkswagen CEO Herbert Diess' supposed interest in acquiring a stake in Tesla was first reported by German business publication Manager Magazin. The report cited company sources who told the magazine that Diess thinks Volkswagen could stand to benefit from Tesla's expertise in batteries and software.
Volkswagen spokesman Pietro Zollino denied the report to CNBC, saying in a statement, "It's completely unfounded. It's pure speculation."
Earlier this week, Moody's changed Tesla's credit outlook from negative to stable after saying the company's Model 3 production level is now "in line with Moody's earlier expectations."
"The stable outlook anticipates that improving operating efficiencies of the Model 3, growing regulatory credit sales, and an adequate liquidity position will provide a sufficient runway to continue undertaking cost cutting initiatives that will improve profitability in the face of aggressive expansion plans," Moody's wrote.