Rivian will pay $250 million to settle a lawsuit over the R1’s price hikes

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

The lawsuit alleged that Rivian included misleading data and numbers in regulatory filings in the run-up to its 2021 IPO about the costs required to build R1 EVs. Although he agreed to pay, Rivian said in a… press release It “denies the allegations in the lawsuit and asserts that this settlement agreement is not an admission of wrongdoing 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 from its cash reserves. The company had $4.8 billion in cash (and equivalents) As of June 30th.

The settlement comes at a pivotal time for Rivian. The company is making deep preparations to launch its second generation EV, the R2 SUV, in 2026. This vehicle is much cheaper than the R1 lineup – and Rivian plans to make more of it. The company says it can build up to 150,000 vehicles a year at its plant in Illinois, and it is also building a new plant in Georgia that will produce the R2 and future vehicles.

Meanwhile, R1 sales were lagging. The company expects to end 2025 having shipped far fewer electric vehicles than it did in 2024 or 2023. A combination of tariffs imposed by President Trump and the loss of the federal tax credit for electric vehicles has 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. Assuming the position of interim Chief Marketing Officer.

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

Customers and fans of the company were angry, and Rivian was soon angry Reversing the decision for customers who have pre-orders. More importantly, the price hike announcement also led to a decline in Rivian’s stock price, causing losses to shareholders.

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

Rivian contributor Charles Larry Cruz File a lawsuit against the company Just a few days later, he claimed, among other things, that the company had misrepresented the true cost of building the R1 vehicles in its IPO documents. He said that these misrepresentations led to the negative impact of the price hike announcement on the stock price. The lawsuit was granted class action status in July 2024.