Rivian sued by shareholder after dropping prices

Wednesday, 9 March 2022

Rivian has caught a lot of flak recently for hiking the prices of its vehicles.

Rivian can’t catch a break at the moment. First, it increased the prices by a reported 17 to 20 per cent on its R1T and R1S vehicles, in response to soaring supply costs. That’s before any dealer markups as well.

Prices for the R1S SUV rose to US$84,500 from US$70,000 (NZ$124,197 from NZ$102,885) and the R1T's price jumped to US$79,500 from US$67,500 (NZ$116,848 from NZ$99,211), which was met with outrage from customers who had already reserved vehicles, as well as quite a few cancelled orders.

Check out the Rivian R1T as it is put through its paces in real-world testing.

Now, after rolling back the increases for existing customers and a public apology from CEO RJ Scaringe, the company is being sued by one of its shareholders, who claims the company misled investors in its initial public offering.

According to Automotive News, the complaint was filed on Monday in the U.S. District Court in San Francisco by Charles Larry Crews. He said the R1T and R1S were so underpriced that Rivian needed to raise the prices after it secured around US$12b in its November 2021 IPO, something the company deliberately concealed from its shareholders.

**READ MORE:

Now, to rub salt into the wound, Rivian is being sued by a shareholder claiming the company misled investors.

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Elon Musk had a go at Rivian, even though the Cybertruck is nowhere to be seen.

Crews added that the increases 'would tarnish Rivian's reputation as a trustworthy and transparent company,' possibly putting many of 55,400 preorders dating back to 2018 in jeopardy of cancellation.

He then said that the price rollback and apology was “a futile attempt at damage control.” Which is a little confusing, because that makes it sound like Rivian can’t win, no matter what it does.

'Earlier [last] week, we announced pricing increases that broke the trust we had worked to build with you,' Scaringe wrote in an open letter to customers. 'We wrongly decided to make these changes apply to all future deliveries, including pre-existing configured preorders.'

'We also didn't manage communications well,' he wrote. 'We didn't give you enough insight into what was driving these decisions. The most important aspect of what we are building is our relationship with all of you.'

“It was wrong and we broke your trust in Rivian.”

According to Reuters Crews said he bought 35 Rivian shares on its first day of trading at US$112.83 each, 45 per cent above the IPO price.

Of course, Tesla’s CEO Elon Musk threw his two cents into the fray as well, taking to Twitter to say that Rivian's 'negative gross margins will be staggering” as a result of the pricing changes.

Many were quick to point out that Tesla’s delayed Cybertruck was meant to start at below US$40,000, but now has no pricing guidance on its website.

'Our primary challenge is affordability,' Musk said in response.

'Creating an expensive truck is relatively easy. If it's extremely hard to do so for Tesla, despite our much greater economies of scale & better technology, then it is damn near impossible for others.'