Rivian will pay $250M to settle lawsuit over R1 price hike

Rivian has agreed to wage $250 cardinal to settee a class-action shareholder suit filed aft the institution abruptly hiked prices connected its R1 pickup motortruck and SUV successful 2022.

The suit alleged Rivian had included misleading statements and figures successful regulatory filings successful the run-up to its 2021 IPO astir the costs required to physique the R1 EVs. Despite agreeing to the payment, Rivian said successful a press release that it “denies the allegations successful the suit and maintains that this statement to settee is not an admittance of responsibility oregon wrongdoing.”

The outgo inactive has to beryllium approved by a justice successful the U.S. District Court for the Central District of California. If that happens, Rivian plans to wage $67 cardinal of the full colony done its directors’ and officers’ liability insurance, and the remaining $183 cardinal retired of its currency reserves. The institution had $4.8 cardinal successful currency (and equivalents) as of June 30.

The colony comes astatine a pivotal clip for Rivian. The institution is heavy successful preparations to motorboat its second-generation EV, the R2 SUV, successful 2026. That conveyance is overmuch cheaper than the R1 lineup — and Rivian plans to marque acold much of them. The institution says it tin physique arsenic galore arsenic 150,000 per twelvemonth astatine its mill successful Illinois, and it’s besides gathering a caller mill successful Georgia that volition nutrient the R2 and aboriginal vehicles.

At the aforesaid time, R1 income person been lagging. The institution expects to decorativeness 2025 having shipped acold less EVs than it did successful 2024 oregon 2023. A operation of President Trump’s tariffs and the nonaccomplishment of the national EV taxation recognition has further analyzable the marketplace for Rivian’s vehicles.

To that end, this week the institution laid disconnected much than 600 employees successful a restructuring that besides saw CEO RJ Scaringe take implicit arsenic interim main selling officer.

Rivian delivered the archetypal R1 pickup trucks successful precocious 2021. In March 2022, the institution decided to hike the terms of the motortruck and the SUV by astir 20%, citing proviso concatenation shortages, inflation, and plans to present cheaper models. (Rivian began R1S SUV deliveries successful August 2022.) The institution applied the terms hike to some caller orders and to those who had placed pre-orders and were connected a waitlist.

Customers and fans of the institution were irate, and Rivian rapidly reversed the determination for customers with preorders. Crucially, the terms hike announcement besides sank Rivian’s banal price, causing losses for shareholders.

“It was incorrect and we broke your spot successful Rivian,” Scaringe wrote successful a missive astatine the time. “I person made a batch of mistakes since starting Rivian much than 12 years ago, but this 1 has been the astir painful.”

Rivian shareholder Charles Larry Crews sued the company conscionable a fewer days later, claiming, among different things, that the institution had misrepresented the existent outgo of gathering the R1 vehicles successful its IPO documentation. Those misrepresentations, helium argued, led to the terms hike announcement’s antagonistic interaction connected the banal price. The suit was granted people enactment presumption successful July 2024.