Rivian will pay $250M to settle lawsuit over R1 price hike

Rivian has agreed to pay $250 million to settle a class-action shareholder lawsuit filed after the company suddenly raised prices on its R1 pickup truck and SUV in 2022.

The lawsuit alleges that Rivian 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 a Press release that it “denies the suit’s allegations and maintains that this agreement to settle 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 liability insurance for its directors and officers 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 an important time for Rivian. The company is gearing up to launch its second-generation EV, the R2 SUV, in 2026. That car is much cheaper than the R1 lineup — and Rivian plans to build more of them The company says it can make 150,000 per year at its factory in Illinois, and it is building a new factory in Georgia that will build the R2 and future vehicles.

At the same time, R1 sales have lagged. The company expects to end 2025 having shipped far fewer EVs than in 2024 or 2023. The combination of President Trump’s tariffs and the loss of federal EV tax credits further complicates Rivian’s car market.

To that end, the company this week laid off more than 600 employees in a restructuring that also saw CEO RJ Scarring. Taking over as interim Chief Marketing Officer.

Rivian delivered the first R1 pickup truck in late 2021. In March 2022, the company decided to increase the prices of trucks and SUVs By about 20%Citing supply chain shortages, inflation and plans to introduce cheaper models. (Rivian begins deliveries of the R1S SUV in August 2022.) The company applied the price increase to both new orders and those who pre-ordered and were on the waiting list.

The company’s customers and fans are furious and Rivian is quick The decision has been reversed for customers with pre-orders. Importantly, the price increase announcement also sank Rivian’s stock price, causing losses to shareholders.

“This was wrong and we have broken your trust in Rivian,” Scaringe wrote in a letter at the time. “I’ve made a lot of mistakes since starting Rivian more than 12 years ago, but this was the most painful.”

Rivian shareholder Charles Larry Crews Filed a case against the company Just days later, claiming, among other things, the company had misrepresented the actual cost of building the R1 vehicle in its IPO documentation. He argued that these misrepresentations led to the negative impact of price hike announcements on stock prices. The case was granted class action status in July 2024.