Rivian Automotive Inc has been sued by a shareholder who claimed the company misled investors in its initial public offering about how it had mispriced its electric vehicles, leading to unpopular price hikes that it swiftly rolled back.
In a complaint filed on Monday in the U.S. District Court in San Francisco, Charles Larry Crews said 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 said the increases “would tarnish Rivian’s reputation as a trustworthy and transparent company,” putting a large number of 55,400 preorders dating back to 2018 in jeopardy of cancellation.
He called the rollback, including an apology from Chief Executive R.J. Scaringe, a “futile attempt at damage control.”
The lawsuit came after Irvine, California-based Rivian sparked a customer backlash on March 1 by raising the R1S’s price to $84,500 from $70,000, and the R1T’s price to about $79,500 from $67,500.
Rivian backtracked two days later, saying preorders as of March 1 would not face the higher prices, and customers who canceled orders could reinstate them at the original prices.
The Amazon.com-backed company went public at $78.00 per share, raising about $12 billion in the world’s largest IPO of 2021. Its shares closed Monday at $42.43, after losing 37 per cent of their value in the prior five trading days.
Rivian did not immediately respond on Tuesday to a request for comment. A lawyer for Crews did not immediately respond to a similar request.
In a March 3 letter to customers, Scaringe said inflationary pressures and higher component costs led to the price increases.
“It was wrong and we broke your trust in Rivian,” Scaringe wrote.
The case is Crews v Rivian Automotive Inc et al, U.S. District Court, Northern District of California, No. 22-01433.
Keyword: Rivian is sued by shareholder after rolling back electric vehicle price hikes