Porsche is in discussions with Croatian electric vehicle developer and producer Rimac Automobili to form a joint venture that will manage the luxury car brand Bugatti, Volkswagen Group management board chairman Herbert Diess has said.

"What we want to do is transition responsibility of Bugatti to Porsche and Porsche in all probability will establish a joint venture with Rimac, with a minority share of Porsche," seenews.com cited Diess as saying in a streamed media conference.

Talks have not been not finalised yet, Diess said, and he rebuffed earlier media speculation suggesting the group would sell the Bugatti brand to Rimac.

With the decision to transfer Bugatti to Porsche and then to a venture with an electric car producer, the Bugatti brand "will get an environment that is actually stronger than being here in Wolfsburg in the volume segment", Diess said.

"There are more synergies over there, such as carbon fibre bodies and high performance batteries. [Bugatti] is in better hands over there."

Earlier in March, Porsche further increased its investment in Rimac Automobili, expanding its stake in the business to 24% with an additional EUR70m. Porsche bought a 10% stake of the business in 2018, before increasing it to 15.5% in 2019

Besides Porsche, shareholders in Rimac are China's Camel Group with 14%, Hyundai Motor with 11% and Kia with 2.7%.

Sveta Nedelja-based Rimac Automobili was established in 2009 by founder Mate Rimac, who began working from his garage on his vision of manufacturing electric sports cars. The company specialises in high-performance electric vehicle technology, seenews.com noted.

Volkswagen Group acquired the Bugatti brand in 1998.