By Abhirup Roy and Mike Scarcella
SAN FRANCISCO (Reuters) -Rivian has agreed to settle a 2022 class-action lawsuit by paying $250 million to some shareholders who had alleged the electric vehicle maker defrauded investors over vehicle prices when it went public, according to a court filing on Thursday.
The lawsuit claimed that Rivian during and after its blockbuster 2021 initial public offering concealed that it had underpriced its EVs, leading to unpopular price hikes later.
Rivian’s share price slid 39% over 10 days after the Irvine, California-based company on March 1, 2022 raised the R1S price to $84,500 from $70,000 and the R1T price to $79,500 from $67,500, angering customers on social media and elsewhere.
“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.
Rivian, known for its R1S electric SUVs and R1T pickups, is set to launch a smaller, more affordable R2 SUV next year to expand its market share at a time when EV demand in the U.S. is expected to plummet after a key tax credit expired last month.
The settlement will help Rivian focus on that launch, the company said.
Success of the R2 is seen as crucial for Rivian’s survival. The company has been trying to cut costs as it grapples with tariffs on auto parts imports and a broader slowdown in EV demand. It is laying off 4.5% of its workforce, or more than 600 employees, an internal email showed on Thursday.
Lawyers for the plaintiffs said in the filing that the settlement amount was “a substantial percentage” of the potential damages plaintiffs could have recovered.
Lead attorneys for the shareholders did not immediately respond to a request for comment.
(Reporting by Abhirup Roy in San Francisco and Mike Scarcella in Washington, D.C.; Editing by Leslie Adler, Muralikumar Anantharaman and Jamie Freed)
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