New Delhi

Volkswagen, Europe's largest automaker, announced $5 billion joint venture with American electric vehicle (EV) startup Rivian. The secretive collaboration hatched last year. It involved shipping camouflaged Audi vehicles to Rivian's California facility, where they underwent intensive testing.

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A team of 30 Rivian engineers examined German car's electronics. They integrated them with Rivian's software and harnesses to assess compatibility.

This covert operation's goal, according to sources close to the deal was to determine if Volkswagen's future EVs could benefit from Rivian's advanced technology.

The success of these tests led to the joint venture announcement. "I think it's quite an accomplishment this all remained under wraps. Especially considering the work involved and number of people across both teams" said Rivian CEO RJ Scaringe to Reuters.

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This deal is critical for both companies. Rivian struggling with a slowdown in EV demand, would receive a much-needed financial boost to continue production. It could potentially achieve profitability.

The partnership could also lead to better deals from suppliers for Rivian. They will benefit from increased buying power of Volkswagen and its subsidiaries like Audi and Porsche.

For Volkswagen, the deal offers access to Rivian's high-performance. It provides cost-effective EV technology.

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Traditional automakers have been grappling with this hurdle. Volkswagen's software division Cariad was established to compete with Tesla.

However, it has been plagued by delays. Financial losses have also been an issue, partly due to sluggish decision-making.

The partnership discussions reportedly began with a private meeting. Scaringe met Volkswagen CEO Oliver Blume at the Porsche facility in Atlanta last August. "We had deep conversation comparing notes on our products" said Scaringe. "We quickly realized we shared similar interests. Especially in certain vehicles." This led to serious discussions about collaboration.

Following the initial meeting teams from both companies visited each other's facilities. Rivian engineers travelled to Germany in fall.

Testing phase in California involved camouflaged Audis. This was described as a "scrimmage" by Scaringe. To overcome potential cultural clashes often seen in such collaborations, Volkswagen's leadership acknowledged the need to embrace Rivian's agility.

This is particularly true in software development according to Volkswagen software chief Wassym Bensaid.

While the future holds promise. Some hurdles remain. Full-fledged testing needs to be conducted. This ensures seamless functionality of Volkswagen vehicles equipped with Rivian's software. This is according to a source close to Volkswagen.

"This partnership has been a long time in making not a sudden decision," Scaringe reassured. The prospect of Rivian technology powering future Porsches is particularly exciting for Scaringe. He is a self-proclaimed Porsche enthusiast. "I can't wait to see Porsche on road with our technology in it," he concluded.

(With inputs from Reuters)