Rivian Reaches $250 Million Settlement in Shareholder Suit Over IPO Pricing Claims

Rivian has agreed to pay $250 million to settle a 2022 shareholder class-action lawsuit that claimed the electric vehicle maker misled investors about its vehicle prices during its 2021 initial public offering (IPO), according to a court filing on Thursday.

The lawsuit alleged Rivian hid the fact that it had underpriced its R1S SUVs and R1T pickups, which later led to unpopular price hikes.

Following the price increases in March 2022—R1S to $84,500 from $70,000 and R1T to $79,500 from $67,500—Rivian’s share price fell 39% over ten days, stirring complaints from customers online, Reuters reported.

“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.

The settlement allows Rivian to focus on its upcoming R2 SUV, a smaller and more affordable model planned for release in the first half of 2026.

Rivian sees the R2 as critical to its survival, especially as EV demand in the US is expected to decline following the expiration of the $7,500 federal EV tax credit last month.

To fund the settlement, Rivian will use $183 million in cash and $67 million from officers’ and directors’ liability insurance.

The payment will be made to an Escrow account within 10 business days, with the full $250 million expected to be completed within 30 days after court approval.

Rivian Cuts 4.5% of Staff Amid EV Slowdown

The court filing details that part of the settlement will cover taxes, administration costs, and any litigation expenses, not exceeding $6.9 million. Attorney fees may also be paid from the fund, up to 24% of the total amount.

The remaining net settlement will go to authorized shareholders who submit valid claims. If claims are not cost-effective, funds could be allocated to charity.

Meanwhile, Rivian continues its cost-cutting efforts amid market challenges. According to Cryptopolitan, CEO RJ Scaringe recently announced a workforce reduction of approximately 4.5%, or over 600 employees, citing the need to control expenses ahead of the R2 launch.

The company also faces tariffs on auto parts and a broader slowdown in EV demand.

“The settlement will help Rivian focus on the mass-market launch of the R2 SUV,” the company said. “Success of the R2 is crucial for Rivian’s future.”

Verita has been appointed as the claims administrator to manage submissions and approvals under court supervision.

Shareholders who do not submit valid claims will not receive any funds but will remain bound by the terms of the settlement.

Originally published on vcpost.com