According to a court filing on Thursday, Rivian has consented to pay a 2022 class action lawsuit of $250 million to a portion of its shareholders who claimed it had defrauded them regarding electric vehicle prices by the time of its initial public offering.
The lawsuit alleged that Rivian, during its 2021 initial public offering blockbuster hid the fact that it had sold its EVs at less than their true value, which resulted in unpopular price increases in the future.
The share price of Rivian surged within 10 days after the Irvine, California-based company on March 1, 2022, increased the R1S price to $84,500 from $70,000 and the R1T price to $79,500 from $67,500, which led the frustration among customers on social media.
In a statement, Rivian said, “The company denies the allegations in the suit and maintains that this agreement to settle is not an admission of fault or wrongdoing.”
Rivian, which has been releasing electric R1S electric SUVs and pickups (R1T), will roll out a small, cheaper R2 SUV next year to capture a larger market share as EV demand in the U.S. is likely to crater following the expiration of one of the major tax credits last month.
The company added that the settlement will assist Rivian in concentrating on that launch.
However, the R2 success is perceived to be the key to the survival of Rivian. The company has been attempting to reduce expenses as it is dealing with tariffs on imported auto parts and a more general slowdown in the demand for EVs.
An internal email revealed on Thursday that it is reducing 4.5 percent of its employees, or more than 600 employees.
The filing by lawyers representing the plaintiffs stated that the settlement was a substantial percentage of “a substantial percentage” the plaintiffs would have compensated.
Therefore, lead attorneys for the shareholders did not immediately respond to a request to comment.
