Rivian Settles Shareholder Lawsuit for $250 Million Following 2022 Vehicle Price Controversy

Major Settlement Agreement Reached

Electric vehicle manufacturer Rivian has reportedly agreed to pay $250 million to settle a class-action shareholder lawsuit stemming from controversial price increases on its R1 vehicles in 2022, according to court documents and company statements. The lawsuit alleged that Rivian included misleading information about production costs in its IPO documentation prior to going public in 2021.

Major Settlement Agreement Reached
Financial Impact and Approval Process
Background: The 2022 Price Hike Controversy
Shareholder Lawsuit and Market Impact
Strategic Context and Company Challenges

Despite agreeing to the substantial payment, sources indicate that Rivian maintains its position of denying any wrongdoing. In an official press release, the company stated that the settlement “is not an admission of fault or wrongdoing” and that it continues to deny the allegations raised in the lawsuit.

Financial Impact and Approval Process

The $250 million settlement reportedly requires approval from a judge in the U.S. District Court for the Central District of California before becoming final. According to the proposed settlement terms, Rivian plans to cover $67 million of the total through its directors’ and officers’ liability insurance, with the remaining $183 million coming from the company‘s cash reserves.

Analysts suggest this financial commitment comes at a challenging time for the EV manufacturer, which reportedly held $4.8 billion in cash and equivalents as of June 30. The settlement represents a significant draw on the company’s financial resources as it navigates a competitive electric vehicle market.

Background: The 2022 Price Hike Controversy

The legal action originated from Rivian’s decision in March 2022 to increase prices for its R1 pickup truck and SUV by nearly 20%, according to reports from that period. The company cited supply chain shortages, inflation, and plans to introduce more affordable models as justification for the price adjustments.

Critically, the price increases reportedly applied not only to new orders but also to customers who had placed pre-orders and were awaiting delivery. The announcement sparked immediate backlash from the company‘s customer base and fan community, leading Rivian to quickly reverse the decision for existing preorder holders.

CEO RJ Scaringe acknowledged the misstep at the time, writing in a public letter that “It was wrong and we broke your trust in Rivian” and describing it as “the most painful” mistake of his 12-year tenure leading the company.

Shareholder Lawsuit and Market Impact

The price hike announcement triggered a significant decline in Rivian’s stock price, causing substantial losses for shareholders. Just days after the controversial decision, shareholder Charles Larry Crews filed suit against the company, alleging that Rivian had misrepresented the true costs of manufacturing R1 vehicles in its IPO documentation.

The lawsuit claimed these alleged misrepresentations ultimately led to the price increase announcement that negatively impacted the company’s stock value. The case was granted class-action status in July 2024, paving the way for the recently announced settlement agreement.

Strategic Context and Company Challenges

The settlement emerges during a pivotal transitional period for Rivian, according to industry analysts. The company is reportedly deep in preparations to launch its second-generation R2 SUV in 2026, a vehicle positioned as more affordable than the current R1 lineup and targeted for higher production volumes.

Sources indicate Rivian plans to manufacture up to 150,000 R2 vehicles annually at its Illinois facility, with additional production capacity planned at a new factory under construction in Georgia. Meanwhile, R1 sales have reportedly been declining, with the company projecting fewer deliveries in 2025 than in either 2024 or 2023.

Market challenges have reportedly intensified due to a combination of President Trump’s tariffs and the loss of federal EV tax credit eligibility for Rivian vehicles. In response to these pressures, the company implemented a restructuring this week that included laying off more than 600 employees and saw CEO Scaringe assume the additional role of interim chief marketing officer.

The settlement resolution, while financially significant, potentially allows Rivian to focus resources and attention on the critical R2 launch and broader company restructuring efforts as it navigates an increasingly competitive electric vehicle landscape.