Article:Rivian Automotive Inc. announced this week that it has agreed to pay $250 million to settle a securities class-action lawsuit stemming from its controversial pricing moves in 2022. The lawsuit was brought by investors who purchased Rivian Class A common stock between November 10, 2021, and March 10, 2022. They claimed Rivian made misleading statements about vehicle production costs and pricing ahead of the IPO, only to later impose steep price increases on its R1 electric pickup and SUV, tanking the stock price.
The settlement includes $67 million from directors' and officers' liability insurance and $183 million from Rivian's cash reserves, subject to court approval. Though Rivian denies all allegations of wrongdoing, this resolution allows the company to focus on delivering its upcoming R2 model planned for 2026, a more affordable EV designed for mass-market appeal.
Rivian's IPO was among the largest of 2021, generating significant buzz due to the promise of feature-rich but competitively priced electric trucks. Internal documents revealed the company underestimated manufacturing costs by a wide margin, forcing the price hikes that sparked shareholder outrage. This case underscores the turbulent path Rivian faces as it scales production while competing against powerhouses like Tesla.
With the lawsuit behind it, Rivian looks to recover and concentrate on ramping up production, controlling costs, and securing a foothold in the increasingly crowded electric vehicle market. The $250 million settlement is a costly but pivotal step towards stabilizing investor confidence and refocusing company efforts for long-term growth.
