There had been reports that the German giant would sell a controlling interest in the French hypercar maker to Rimac as part of a financial deal that involved Porsche increasing its investment in the Croatian firm. Porsche recently increased its stake in Rimac from 15.5% to 24% in a deal worth £60.4 million.
During the Volkswagen Group's annual media conference, Diess said that responsibility for Bugatti is currently being transferred to Porsche, which would then discuss a possible joint venture with Rimac.
"Transferring [Bugatti] to Rimac isn't true," said Diess. "Porsche is currently preparing a partnership that's going to be under discussion with Rimac, and Porsche will be taking care of that.
"The whole thing isn't yet finalised. 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."
It's not clear whether any potential Bugatti joint venture would involve Porsche and Rimac taking an equal share.
Diess added that the decision to move responsibility for Bugatti within the Volkswagen Group to Porsche is because "we believe that Bugatti will get an environment that's stronger than being here in Wolfsburg in the volume segment."
He elaborated: "We have more synergies [between Bugatti and Porsche] over there, such as carbonfibre bodies and high-performance batteries."