Rivian Will Pay $250m To Settle Lawsuit Over R1 Price Hike

Rivian has agreed to salary $250 cardinal to settee a class-action shareholder suit revenge aft nan 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 nan run-up to its 2021 IPO astir nan costs required to build nan R1 EVs. Despite agreeing to nan payment, Rivian said successful a press release that it “denies nan allegations successful nan suit and maintains that this statement to settee is not an admittance of responsibility aliases wrongdoing.”

The costs still has to beryllium approved by a judge successful nan U.S. District Court for nan Central District of California. If that happens, Rivian plans to salary $67 cardinal of nan full colony done its directors’ and officers’ liability insurance, and nan remaining $183 cardinal retired of its rate reserves. The institution had $4.8 cardinal successful rate (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, nan R2 SUV, successful 2026. That conveyance is overmuch cheaper than nan R1 lineup — and Rivian plans to make acold much of them. The institution says it tin build arsenic galore arsenic 150,000 per twelvemonth astatine its mill successful Illinois, and it’s besides building a caller mill successful Georgia that will nutrient nan R2 and early vehicles.

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

To that end, this week nan institution laid disconnected much than 600 labor successful a restructuring that besides saw CEO RJ Scaringe take complete arsenic interim main trading officer.

Rivian delivered nan first R1 pickup trucks successful precocious 2021. In March 2022, nan institution decided to hike nan value of nan motortruck and nan 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 nan value hike to some caller orders and to those who had placed pre-orders and were connected a waitlist.

Customers and fans of nan institution were irate, and Rivian quickly reversed nan determination for customers pinch preorders. Crucially, nan value hike announcement besides sank Rivian’s banal price, causing losses for shareholders.

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

Rivian shareholder Charles Larry Crews sued nan company conscionable a fewer days later, claiming, among different things, that nan institution had misrepresented nan existent costs of building nan R1 vehicles successful its IPO documentation. Those misrepresentations, he argued, led to nan value hike announcement’s antagonistic effect connected nan banal price. The suit was granted people action position successful July 2024.