Rivian has agreed to pay $250 million to settle a class-action lawsuit filed by shareholders who alleged the company misled investors about vehicle pricing during its 2021 initial public offering, according to a court filing on Thursday.
The lawsuit, filed in 2022, accused Rivian of concealing that it had underpriced its vehicles during the IPO, resulting in steep and unpopular price increases shortly afterward. The Irvine, California-based company’s share price plunged 39% over a 10-day period after it raised the R1S SUV’s price from $70,000 to $84,500 and the R1T pickup’s price from $67,500 to $79,500 in March 2022, prompting backlash from customers on social media.
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“The company denies the allegations in the suit and maintains that this agreement to settle is not an admission of fault or wrongdoing,” Rivian said in a statement. The company added that the settlement would allow it to focus on upcoming priorities, including the launch of its smaller, more affordable R2 SUV next year.
The R2 launch is viewed as critical to Rivian’s future as the electric vehicle maker faces a challenging market environment. The company has been cutting costs and restructuring operations, including laying off about 4.5% of its workforce, or more than 600 employees, as it deals with higher tariffs on imported auto parts and a slowdown in EV demand in the United States.
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Lawyers representing the plaintiffs said in the court filing that the $250 million settlement represented “a substantial percentage” of the potential damages that could have been recovered if the case had gone to trial.
