The development throws the future of the 32-year-old four-time world champion into doubt.
It's all set to end a six-year spell for Vettel at Ferrari.
At the moment, Vettel's F1 future looks bleak. Here's more.
If Sainz leaves McLaren, the team could opt for Ricciardo, who is believed to be unsettled at Renault.
McLaren could try to rope in Vettel. If that doesn't happen, then the German could be an option for Renault.
However, the Briton had said on Instagram, "There is no dream of another team. I am with my dream team."
Meanwhile, Vettel's former team Red Bull said that they would not partner Max Verstappen with another top-line driver.
Also, Vettel is likely not to be interested.
Vettel had joined Ferrari in 2015 and hoped of winning the title with them.
However, he was highly inconsistent during his spell here.
2019 was a disaster for Vettel, who finished fifth in the standings and sealed nine podiums.
2017 and 2018 saw Vettel finish second behind Hamilton.
In 2015 and 2016, he finished third and fourth respectively.
He secured 14 Grand Prix victories.
Last month, in an online news conference, Vettel said he had made it clear he wanted to stay at Ferrari beyond the end of this season.
"Whatever the deal will be like, it is whatever I and the team will be comfortable with. In terms of duration, normally the contracts I had in the past were all a three-year deal."
It has been reported that Ferrari offered Vettel a vastly reduced salary and a shorter contract than he desired.
In 2017 and 2018, Ferrari had a faster car but mistakes cost the side.
That's where the trust broke down.
With Charles Leclerc coming in last year and outwitting Vettel across departments, the latter lost his credibility as the number one.
Vettel fell from grace.
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