Rivian has agreed to pay $250 million to settle a class action shareholder lawsuit filed after the company suddenly hiked prices on its R1 pickup truck and SUV in 2022.
The lawsuit alleged Rivian had included misleading statements and figures in regulatory filings in the run-up to its 2021 IPO about the costs required to build the R1 EVs. Despite agreeing to the payment, Rivian said in a press release that it “denies the allegations in the suit and maintains that this agreement to settle is not an admission of fault or wrongdoing.”
The payment still has to be approved by a judge in the U.S. District Court for the Central District of California. If that happens, Rivian plans to pay $67 million of the total settlement through its directors’ and officers’ liability insurance, and the remaining $183 million out of its cash reserves. The company had $4.8 billion in cash (and equivalents) as of June 30.
The settlement comes at a pivotal time for Rivian. The company is deep in preparations to launch its second-generation EV, the R2 SUV, in 2026. That vehicle is much cheaper than the R1 lineup — and Rivian plans to make far more of them. The company says it can build as many as 150,000 per year at its factory in Illinois, and it’s also building a new factory in Georgia that will produce the R2 and future vehicles.
At the same time, R1 sales have been lagging. The company expects to finish 2025 having shipped far fewer EVs than it did in 2024 or 2023. A combination of President Trump’s tariffs and the loss of the federal EV tax credit has further complicated the market for Rivian’s vehicles.
To that end, this week the company laid off more than 600 employees in a restructuring that also saw CEO RJ Scaringe take over as interim chief marketing officer.
Rivian delivered the first R1 pickup trucks in late 2021. In March 2022, the company decided to hike the price of the truck and the SUV by nearly 20%, citing supply chain shortages, inflation, and plans to introduce cheaper models. (Rivian began R1S SUV deliveries in August 2022.) The company applied the price hike to both new orders and to those who had placed preorders and were on a waitlist.
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Customers and fans of the company were irate, and Rivian quickly reversed the decision for customers with preorders. Crucially, the price hike announcement also sank Rivian’s stock price, causing losses for shareholders.
“It was wrong and we broke your trust in Rivian,” Scaringe wrote in a letter at the time. “I have made a lot of mistakes since starting Rivian more than 12 years ago, but this one has been the most painful.”
Rivian shareholder Charles Larry Crews sued the company just a few days later, claiming, among other things, that the company had misrepresented the true cost of building the R1 vehicles in its IPO documentation. Those misrepresentations, he argued, led to the price hike announcement’s negative impact on the stock price. The lawsuit was granted class action status in July 2024.
