Rivian Settles $250 Million Lawsuit Over IPO Misrepresentation

Electric vehicle manufacturer Rivian Automotive Inc. has agreed to a $250 million settlement to resolve a class-action lawsuit filed by shareholders in 2022. The lawsuit alleged that Rivian misled investors about vehicle pricing during its 2021 initial public offering (IPO).

The settlement, announced on October 23, 2025, addresses claims that Rivian failed to disclose that production costs for its R1T pickup truck and R1S SUV exceeded their initial sales prices. This omission led to significant price increases in March 2022, causing customer dissatisfaction and a 39% decline in Rivian's stock price over ten days.

Rivian, founded in 2009 by CEO RJ Scaringe, specializes in electric trucks and SUVs. The company went public in November 2021, raising approximately $11.93 billion. In March 2022, Rivian increased the R1T's price from $67,500 to $79,500 and the R1S's price from $70,000 to $84,500, leading to substantial customer dissatisfaction and cancellations. CEO RJ Scaringe issued a public apology and reversed the price increases for existing preorders.

Following the price hikes, Rivian's stock price declined by 39% over ten days. The $250 million settlement is pending court approval and will be funded through a combination of $67 million from directors' and officers' liability insurance and $183 million from Rivian's cash reserves. Rivian denies any wrongdoing but agreed to the settlement to focus on future projects, including the launch of its more affordable R2 SUV in 2026.

The success of the R2 is seen as crucial for Rivian's survival, especially as the company contends with import tariffs, cost-cutting efforts, and a broader slowdown in EV demand. In response to these challenges, Rivian has been trying to cut costs, including laying off 4.5% of its workforce, or more than 600 employees.

The lawsuit and subsequent settlement highlight the importance of transparency in corporate disclosures, especially during IPOs. Investors rely on accurate information to make informed decisions, and any perceived deception can lead to legal repercussions and loss of trust. For customers, the incident underscores the volatility of pricing in the EV market and the potential for unexpected cost increases. Economically, the settlement may impact Rivian's financial position, potentially affecting its ability to invest in future projects and compete in the rapidly evolving EV market.

Rivian's settlement marks a pivotal moment as the company navigates legal challenges and positions itself for future growth in the competitive EV market.