Rivian agrees to settle $250m IPO suit
Rivian states that its settlement is not an admission of wrongdoing, but nevertheless has agreed to pay the $250 million to investors. The point of contention: a 2022 decision to raise prices for its first two models, the R1T and R1S, by up to 20 per cent – not only for new customers but also existing reservation holders. This saw the price of the R1 rise from $70,000 to $84,500 and the R1T increase from $67,500 to $79,500.
In response, a number of pre-order customers seemingly cancelled their reservations and Rivian’s share price dropped by 39 per cent over ten days. Rivian then rescinded the price increases for orders already placed.
CEO RJ Scaringe said at the time: “For anyone with a Rivian preorder as of the March 1 pricing announcement, your original configured price will be honored. If you canceled your preorder on or after March 1 and would like to reinstate it, we will restore your original configuration, pricing and delivery timing.”
This was seemingly too little, too late for some investors; in March 2022, shareholders filed a claim against the company with the US District Court in San Francisco. One investor, Charles Larry Crews, alleged that Rivian failed to tell investors in a timely manner that it had priced its first R1T and R1S models too low.
According to CBT News, the legal team representing the complainants has now welcomed the settlement, calling it a “significant recovery for investors compared with the potential damages that could have been awarded had the case gone to trial”.
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