Rivian has agreed to pay $250 million to settle a category motion shareholder lawsuit filed after the corporate all of a sudden hiked costs on its R1 pickup truck and SUV in 2022.
The lawsuit alleged Rivian had included deceptive statements and figures in regulatory filings within the run-up to its 2021 IPO in regards to the prices required to construct the R1 EVs. Regardless of agreeing to the cost, Rivian stated in a press release that it “denies the allegations within the go well with and maintains that this settlement to settle just isn’t an admission of fault or wrongdoing.”
The cost nonetheless needs to be permitted by a choose within the U.S. District Court docket for the Central District of California. If that occurs, Rivian plans to pay $67 million of the whole settlement via its administrators’ and officers’ legal responsibility insurance coverage, and the remaining $183 million out of its money reserves. The corporate had $4.8 billion in money (and equivalents) as of June 30.
The settlement comes at a pivotal time for Rivian. The corporate is deep in preparations to launch its second-generation EV, the R2 SUV, in 2026. That car is less expensive than the R1 lineup — and Rivian plans to make much more of them. The corporate says it may construct as many as 150,000 per yr at its manufacturing unit in Illinois, and it’s additionally constructing a brand new manufacturing unit in Georgia that can produce the R2 and future automobiles.
On the identical time, R1 gross sales have been lagging. The corporate expects to complete 2025 having shipped far fewer EVs than it did in 2024 or 2023. A mixture of President Trump’s tariffs and the lack of the federal EV tax credit score has additional difficult the marketplace for Rivian’s automobiles.
To that finish, this week the corporate laid off greater than 600 workers in a restructuring that additionally noticed CEO RJ Scaringe take over as interim chief advertising and marketing officer.
Rivian delivered the primary R1 pickup vans in late 2021. In March 2022, the corporate determined to hike the value of the truck and the SUV by almost 20%, citing provide chain shortages, inflation, and plans to introduce cheaper fashions. (Rivian started R1S SUV deliveries in August 2022.) The corporate utilized the value hike to each new orders and to those that had positioned preorders and had been on a waitlist.
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Clients and followers of the corporate had been irate, and Rivian shortly reversed the choice for purchasers with preorders. Crucially, the value hike announcement additionally sank Rivian’s inventory value, inflicting losses for shareholders.
“It was incorrect and we broke your belief in Rivian,” Scaringe wrote in a letter on the time. “I’ve made quite a lot of errors since beginning Rivian greater than 12 years in the past, however this one has been essentially the most painful.”
Rivian shareholder Charles Larry Crews sued the company just some days later, claiming, amongst different issues, that the corporate had misrepresented the true value of constructing the R1 automobiles in its IPO documentation. These misrepresentations, he argued, led to the value hike announcement’s unfavorable impression on the inventory value. The lawsuit was granted class motion standing in July 2024.