Shareholder Sues Rivian Over Price-Hike Rollback
The suit claims the automaker made materially inaccurate statements regarding its vehicles.
When Rivian announced that it would be significantly raising the prices of its R1S electric SUV and R1T electric pickup, including for customers who had preordered and not yet received the vehicles, the burgeoning automaker was beset on all sides by unhappy clientele and investors. Even though the company eventually reversed the price hike for existing reservation holders, there's some disapproval with how the situation unfolded.
Charles Larry Crews, Jr., a Rivian shareholder, is the named party in a lawsuit filed against Rivian on Monday, Reuters reports. The complaint, which was filed in the US District Court in San Francisco, claims that Rivian's post-IPO price hike "would tarnish Rivian's reputation as a trustworthy and transparent company and would put a significant number of the existing backlog of 55,400 preorders along with future preorders in jeopardy of cancellation," according to a statement from Block & Levinton LLP, the law firm that filed the suit on Crews' behalf.
The issue at hand is whether or not this decision negatively impacted shareholders. In its statement, Block & Levinton LLP claimed that Rivian's pre-IPO statements "were materially inaccurate, misleading and/or incomplete because they failed to disclose, among other things, that the R1T and R1S were underpriced to such a degree that Rivian would have to raise prices shortly after the IPO." The firm is currently seeking other investors who feel that Rivian's decision cost them money.
"The federal securities laws provide a very strong remedy for investors in an IPO when a company makes an untrue statement or omits to disclose key facts in their offering materials," a spokesperson for Block & Levinton LLP wrote in an emailed statement to Roadshow. "We look forward to litigating this case on behalf of Rivian investors." Rivian declined to comment to Roadshow, citing "ongoing litigation."
Rivian found itself in hot water on March 1, when the company announced a series of $12,000 price hikes for its R1S and R1T models, including vehicles already preordered and awaiting production. Backlash was near-immediate, and just two days later, the company announced that it would honor pre-hike pricing for reservation holders and allow those who canceled their preorders to get the original price. In an apology email to those affected, Rivian CEO RJ Scaringe cited inflation and component costs as the reasons behind the initial price adjustments.
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