SLOW GOING: Rivian buyers say that the manufacturer has taken too long to get its product to market, and that continuing changes and price increases have forced them to take legal action.

RIVIAN has raised the ire of customers again by making changes to the R1T trim options that have caught reservation holders on a (cranky) Rivian owners forum by surprise.

According to breakingnews website, emails circulating among Rivian reservation holders, the availability of dark-stained ash wood in what Rivian calls the Ocean Coast interior is being unilaterally swapped out for a light ash wood.

Rivian has reportedly been struggling to source the lighter colour which was holding up deliveries of R1Ts with the Ocean Coast configuration.

Rivian seems to acknowledge in communications with reservation holders that some customers may not like the change and is offering to replace the wood with a dash wrapped in light vegan leather.

Many customers are furious about the change particularly on top of significant recent price rises.

But that’s not the only change Rivian made this week and the second is sure to upset some customers even more.

The company is reportedly sending emails to reservation holders, informing them that the entry-level Explore trim they selected is no longer available.

Those customers are being given the chance to upgrade to either the higher-spec Adventure trim or cancel their orders.

According to breakingnews, forums of Rivian buyers/reservation members are pointing out that they just signed non-refundable contracts to secure the outgoing US Federal tax credit, meaning they’re facing the choice to walk away from $US100 ($A144.59) they transferred to Rivian this week or pay considerably more for their EV.

All of this comes with a backdrop of multiple litigations affecting the EV company.

In May, New York legal firm Levi & Korsinsky, LLP, notified investors in Rivian Automotive, Inc. of a class action securities lawsuit.

The lawsuit seeks to recover losses on behalf of Rivian Automotive Inc. investors who were adversely affected by alleged securities fraud.

Levi and Korsinsky (L&K) said: “The lawsuit is on behalf of investors that purchased or otherwise acquired Rivian common stock pursuant and/or traceable to Rivian’s initial public offering on November 10, 2021 and/or between November 10, 2021, and March 10, 2022.”

According to L&K documents issued in connection with the initial public offering it contained representations that were materially inaccurate, misleading, and/or incomplete because they failed to disclose, among other things, that the R1T electric pickup truck and R1S electric SUV were under-priced to such a degree that Rivian would have to raise prices shortly after the IPO.

Further, these price increases would tarnish Rivian’s reputation as a trustworthy and transparent 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.

A second New York legal firm, Pomerantz LLP, is also on Rivian’s case with class action litigation of a similar nature to L&K.

But they go further…

Pomerantz said: “In connection with the IPO, Rivian offered and sold 175,950,000 shares of its common stock at a price to the public of $US78.00 ($A112.77) per share, which included the exercise in full by the IPO underwriters of their option to purchase an additional 22,950,000 shares of the company’s common stock.

The gross proceeds to the company from the IPO were $US13.7 billion ($A19.8b), before deducting underwriting discounts and commissions, and estimated offering expenses payable by the company.

In the Court Registration Statement, defendants represented, among other things, that Rivian had 55,400 combined pre orders for the R1T and R1S, and that Rivian planned to “produce approximately 1200 R1Ts and 25 R1Ss and deliver approximately 1000 R1Ts and 15 R1Ss” by the end of 2021.

The complaint alleges that throughout the Class Period, defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts, about the company’s (Rivian’s) business and operations.

Specifically, defendants made false and/or misleading statements and/or failed to disclose that:

a) Rivian would not meet its 2021 production and delivery targetsb) Rivian’s vehicles were under-priced and as a result the company would need to substantially increase prices
c) as a result, defendants’ representations about the company’s business, operations, and prospects lacked a reasonable basis.

The truth about Rivian’s production capabilities and business prospects began to emerge on December 16, 2021, when Rivian disclosed that it would fall “a few hundred vehicles short of its 2021 production target of 1200 vehicles”.

“In addition to admitting that production was lagging, Defendant Robert J. Scaringe – the company’s Founder, CEO and Chairman – acknowledged that Rivian’s vehicles were ‘very aggressively priced’ and that, against ‘the backdrop of inflation’ the company was ‘looking at their pricing’.”

On this news, Rivian’s stock price fell $US11.17 ($A16.15) per share, or more than 10 per cent, from a close of $US108.87 ($A157.43) per share on December 16, 2021, to close at $97.70 ($A141.28) per share on December 17, 2021. On January 10, 2022, Rivian confirmed that it had only “produced 1015 vehicles by the end of 2021” and that only “920 vehicles were delivered by that date”.

Additional corrective information surfaced on March 1, 2022, when Rivian announced that it would dramatically increase the starting price of the R1T by about 17 per cent (to approximately $US79,000 ($A114,249.36) from $US67,500 ($A97,618.12), and the R1S by about 20 per cent (to approximately $US84,500 ($A122,204.39) from $US70,000 ($A101,233.12).

Notably, these price changes would apply not only to future orders, but also to existing pre orders (many of which had been placed three or more years prior).

As of the time the complaint was filed, the price of Rivian common stock continued to trade below the $US78.00 ($A112.79) per share IPO price, damaging investors.

customers class action against rivian begins

Keyword: Customers class action against Rivian begins

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