Rivian Settles $250 Million Lawsuit Over R1 Price Hike
Electric vehicle manufacturer Rivian has agreed to a $250 million settlement to resolve a class action shareholder lawsuit related to its abrupt price increase on the R1 pickup truck and SUV models in 2022. The lawsuit accused Rivian of misleading investors by underreporting production costs in its IPO filings, contributing to the stock price decline following the price hike announcement. Despite the settlement agreement, Rivian maintains it did not admit to any fault or wrongdoing, emphasizing in a press release that the move is intended to avoid prolonged litigation.
Settlement Payment and Court Approval
The $250 million settlement requires approval from a judge in the U.S. District Court for the Central District of California. Upon approval, Rivian plans to cover $67 million through its directors’ and officers’ liability insurance, with the remaining $183 million paid from its cash reserves. As of June 30, 2025, Rivian held $4.8 billion in cash and equivalents.
Context and Operational Challenges
The settlement occurs during a critical phase for Rivian, as the company prepares to launch its second-generation electric SUV, the R2, in 2026. The R2 is positioned as a more affordable model compared to the R1 lineup, with production targets of up to 150,000 units annually at its Illinois factory, supplemented by a new manufacturing facility in Georgia. Meanwhile, sales of the R1 models have been disappointing, with expected shipments in 2025 falling short of previous years. Market factors, including tariffs imposed during the Trump administration and the expiration of federal EV tax credits, have further complicated Rivian’s sales environment. In response to these challenges, Rivian recently laid off over 600 employees and appointed CEO RJ Scaringe as interim chief marketing officer, signaling a strategic realignment.
Price Hike and Shareholder Response
Rivian debuted the R1 pickup in late 2021 and introduced the R1S SUV in August 2022. In March 2022, the company announced a nearly 20% price increase for both vehicles, citing inflation, supply chain disruptions, and plans to introduce lower-cost models. The price hike applied to new orders and existing preorders, sparking customer outrage. Following customer backlash, Rivian reversed the price increase for preorders but the announcement significantly impacted the company’s stock value, triggering a shareholder lawsuit.
“It was wrong and we broke your trust in Rivian,” CEO RJ Scaringe acknowledged in a letter at the time. “I have made a lot of mistakes since starting Rivian more than 12 years ago, but this one has been the most painful.”
The lawsuit, led by shareholder Charles Larry Crews, claimed that Rivian misrepresented production costs in its IPO documentation, which allegedly misled investors and contributed to the stock’s decline following the price hike.
FinOracleAI — Market View
Rivian’s $250 million settlement marks a significant financial and reputational milestone amid ongoing operational and market pressures. While the company denies wrongdoing, the resolution provides clarity and allows management to focus on strategic product launches and cost management.
- Opportunities: Launch of the more affordable R2 SUV could expand market share and improve production scale.
- Risks: Continued sales decline of R1 models and external pressures such as tariffs and subsidy losses may constrain revenue growth.
- Management Focus: Recent leadership restructuring suggests a drive to strengthen marketing and operational efficiency.
- Financial Health: Strong cash reserves provide a buffer to absorb settlement costs and ongoing investments.
Impact: The settlement neutralizes a significant legal risk, allowing Rivian to prioritize product innovation and market expansion efforts amid a challenging EV landscape.
