Electric vehicle startup Rivian announced on Thursday that it has settled a lawsuit with some of its investors. The company continues to deny allegations of making “materially untrue” statements during its inial public offering but says it agreed to pay $250 million to clear itself of distractions as it focuses on building its next EV, the mass-market R2, which is due next year.
Rivian was first sued by a shareholder in 2022 over claims that the startup knew it would cost far more for it to build each R1T electric truck and R1S electric SUV than the advertised $67,500 and $70,000 prices, respectively. A big surprise price increase would tarnish the nascent automaker’s reputation, the lawsuit claimed, and could lead to many of the almost 56,000 preorders being canceled.
Just a few months after its November 2021 IPO, the company had indeed issued a hefty price hike: $79,500 for the R1T and $84,500 for the R1S SUV. After an outcry, the company said it would honor the original price for its existing preorders. By that point, though, the damage was done, and more than a third of the company’s value was erased within a few days, the lawsuit alleged.