Rivian has agreed to pay $250 million to settle a shareholder class action filed after suddenly raising prices on its 2022 R1 truck and SUV.
The lawsuit alleged that Rivian had included misleading statements and facts in regulatory filings ahead of its 2021 IPO about the costs required to build the R1 EVs. Despite agreeing to the payment, Rivian told a press release that it “denies the allegations in the lawsuit and maintains that this settlement agreement is not an admission of fault or wrongdoing.”
The payment must still 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. The company had $4.8 billion in cash (and cash equivalents) from June 30.
The settlement comes at a pivotal time for Rivian. The company is deep into preparations to launch its second-generation EV, the R2 SUV, in 2026. This vehicle is much cheaper than the R1 series — and Rivian plans to make a lot more of them. The company says it can build up to 150,000 a year at its Illinois plant and is also building a new plant in Georgia that will produce the R2 and future vehicles.
At the same time, sales of the R1 are lagging behind. The company expects to finish 2025 having shipped far fewer EVs than it did in 2024 or 2023. The combination of President Trump’s tariffs and the loss of the federal EV tax credit further complicated the market for Rivian’s vehicles.
To that end, the company this week laid off more than 600 employees in a restructuring that also saw CEO RJ Scaringe to take over as interim marketing director.
Rivian delivered the first R1 trucks in late 2021. In March 2022, the company decided to raise the price of the truck and SUV by nearly 20%, citing supply chain shortfalls, inflation and plans to introduce cheaper models. (Rivian began deliveries of the R1S SUV in August 2022.) The company applied the price increase to both new orders and those that had pre-ordered and were on a waiting list.
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Customers and fans of the company were outraged, and Rivian quickly reversed the decision for customers with pre-orders. Crucially, the price hike announcement also sank Rivian’s stock price, causing losses to shareholders.
“It was wrong and we broke your trust in Rivian,” Scaring wrote in a letter at the time. “I have made many mistakes since I started Rivian more than 12 years ago, but this was the most painful.”
Rivian shareholder Charles Larry Crews sued the company just a few days later, alleging, among other things, that the company had misrepresented the actual cost of building the R1 vehicles in its IPO documentation. These misrepresentations, he argued, led to the negative impact of the price increase announcement on the share price. The lawsuit was granted class action status in July 2024.
