- Rivian will pay to settle a lawsuit over 2022 price hikes.
- Suit claims it misled investors about costs before its IPO.
- Deal covers Class A shareholders from 2021 to early 2022.
For Rivian’s earliest customers, timing proved to be an expensive lesson. In early 2022, the young EV maker frustrated reservation holders by announcing steep price hikes for the R1T pickup and R1S SUV just before their launch. As it turns out, that decision came with a hefty price tag of its own.
This week, Rivian confirmed it would pay $250 million to settle a class-action lawsuit filed shortly after those price increases were made public.
Read: Rivian Rethinks Doors Only After Tesla Traps Put Design Flaws In Spotlight
In March 2022, Rivian revealed that prices for the R1T would climb from $67,500 to $79,500, while the R1S would rise from $70,000 to $84,500. Price adjustments aren’t unusual in the auto industry, but few companies raise figures that sharply, Tesla’s occasional curveballs aside.
The real misstep came when Rivian initially applied the new prices to existing reservations. That move hit early adopters who had placed their deposits months earlier the hardest, and it didn’t sit well with them.
Rivian reversed course within days, sparing existing customers from the higher prices and limiting the increases to new buyers. But the damage was done.
Soon after, a lawsuit accused the company of including misleading statements and cost estimates in filings made before its 2021 IPO about the true expenses involved in producing the R1 lineup.
Now, Rivian has agreed to settle the case. The company will pay $250 million in total, with $67 million covered through its directors’ and officers’ liability insurance, and the remaining $183 million drawn from its cash reserves. The agreement still awaits final approval from the court.
Rivian maintains that it denies all allegations and states the settlement “is not an admission of fault or wrongdoing.”
Anyone who acquired Rivian Class A common stock between November 10, 2021, and March 10, 2022, qualifies as part of the settlement group.
The settlement comes at the worst possible time for the car manufacturer. While it had $4.8 billion in cash and equivalents at the end of June, it needs all the money it can get to successfully launch the mid-size R2, which could prove to be a make-or-break moment for the automaker.
