The shareholder claims Rivian misled investors by upping prices and then rolling them back soon thereafter.
According to a recent story published by Automotive News, a Rivian shareholder has filed a lawsuit against the company due to the recent confusing and misleading price increases, which were followed by a complete turnaround by the automaker.
Essentially, as the story goes, Rivian upped its prices significantly, though it was still able to keep its starting prices listed as they were during its IPO. This is because the company will eventually launch dual-motor options that fit the earlier price point. Meanwhile, the EVs that are currently available see a big increase.
Many Rivian reservation holders were either threatening to cancel their orders or actually followed through with it. The electric pickup truck maker quickly changed plans and decided that people who currently have an R1T or R1S on order will still enjoy the previously agreed-upon prices. Even people who canceled their order were welcomed to reinstate them at the original prices.
If the company’s stock wasn’t already suffering for a variety of reasons, you can imagine what a huge shift in prices, new product announcements, and then a shift back could do to the share price. Moreover, moves like this cause investors to become confused and skeptical. Not to mention losing faith in a company even if it eventually changes direction and does what’s seen by most as the right thing.
This week, Charles Larry Crews filed a complaint with the US District Court in San Francisco suggesting that Rivian “concealed how its R1S SUV and R1T pickup truck were so underpriced that it needed to raise prices not long after its November 2021 IPO.”
Crews went on to say that the price increases will make people lose trust in Rivian and cause a multitude of potential cancellations. He also said Rivian’s quick change of direction – along with the apology from CEO RJ Scaringe – was a “futile attempt at damage control.” In a case like this, it can be argued that no matter how the story ends, the damage was already done.
Interestingly, ahead of the lawsuit filing, Scaringe had already made it clear that he shares some of the same views that Crews eventually brought forward. While Scaringe’s apology is respectable, Crews can try to use the CEO’s admission about breaking the trust of its customers to support his case against Rivian. In an email to Rivian customers dated March 3, the CEO wrote:
“It was wrong and we broke your trust in Rivian.”
For those interested in following the case, Automotive News lists it as “Crews v Rivian Automotive Inc et al, U.S. District Court, Northern District of California, No. 22-01433.”
Keyword: Rivian Electric Truck Maker Sued By Shareholder For Recent Price Shifts