Rivian Shareholder Sues Over Electric Vehicle Pricing Saga
David Shultz reports on clean technology and electric vehicles, among other industries, for dot.LA. His writing has appeared in The Atlantic, Outside, Nautilus and many other publications.
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Electric vehicle manufacturer Rivian is under fire again for the manner in which it has priced its cars.
In the wake of Rivian’s move last week to increase prices up to 20% on both its electric pickup truck and electric SUV, a Rivian shareholder has now sued the Irvine-based company for failing to disclose to investors that its cars were “underpriced” and that it would need to adjust accordingly.
Rivian shareholder Charles Crews filed the securities lawsuit on Monday in U.S. District Court in San Francisco. The complaint, which is seeking class-action status, alleges that the startup misled investors in the run-up to its November initial public offering by failing to publicly disclose that its vehicles “were underpriced to such a degree that Rivian would have to raise prices shortly after the IPO.”
The lawsuit also cites the customer backlash in response to the price hikes, adding that the automaker failed to disclose that they “would tarnish Rivian’s reputation as a trustworthy and transparency company and would put a significant number of the existing backlog of 55,400 pre-orders along with future pre-orders in jeopardy of cancellation.”
Rivian subsequently backtracked on the price increase last week, with CEO RJ Scaringe apologizing to customers and reinstated the original prices for those who had already pre-ordered their cars. The price hikes, which Scaringe attributed to rising production costs, remain in effect for new orders.
Crews’ lawsuit described Rivian’s backtracking as a “futile attempt at damage control.” The stockholder purchased 35 shares of Rivian stock on the company’s first day of trading on Nov. 10, at a price of $112.83 per share, according to the complaint. While Rivian’s IPO saw it briefly become the world’s third-most valuable automaker, the stock has lost nearly 60% value since the start of this year. It has taken an especially sharp fall since Rivian announced the price hikes—declining more than 37% since the close of trading Feb. 28, to $42.21 at Tuesday’s close.
“As we plead in the complaint, we see that it's clear that the company probably knew that some of these price increases were going to be necessary, but didn't tell that to investors when they filed their IPO,” Crews’ attorney, Jacob Allen Walker of law firm Block & Leviton, told dot.LA. “We wouldn't have filed if we didn't think it was a strong case,” Walker said, adding that securities laws governing investor disclosures “are very strict about IPOs.”
When reached for comment, a Rivian spokesperson said the company would not comment on ongoing litigation.
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David Shultz reports on clean technology and electric vehicles, among other industries, for dot.LA. His writing has appeared in The Atlantic, Outside, Nautilus and many other publications.
