Rivian is facing a new lawsuit from one of its shareholders. Filed on Monday in the U.S. District Court in San Francisco, the lawsuit claims Rivian misled investors during its initial public offering (IPO) last year, a move which eventually led to the company raising prices last week, and then cancelling them just days later.
In his lawsuit, shareholder Charles Larry Crews alleges the automaker did not publicly disclose it had underpriced its vehicles and that they would have to raise prices soon after their IPO in November 2021.
The admission that Rivian underpriced their vehicles came from former executive Laura Schwab. In a lawsuit filed in November claiming she was fired for raising concerns about the “toxic bro culture” at the company, Schwab said she warned executives about their pricing structure.
“First, it was clear that the vehicles were underpriced, and each sale would result in a loss the company. Ms. Schwab ultimately contacted Dennis Lucey, Rivian’s Finance Director, and worked with him to develop projections showing how much of a loss the company would incur if Rivian did not raise prices. Ms. Schwab raised this issue with several executives, including Mr. Behl, Stuart Dixon (Director of Product Management), and Andy Zicheck (Principal Product Manager),” her lawsuit said. (via Automotive News)
After having her concerns pushed aside, executives later agreed a price hike was needed after the issue was raised by a male colleague.
Last week Rivian did just that, raising prices for both new orders and existing reservation holders, causing a massive backlash from their most loyal supporters.
The criticism was enough for Rivian to backtrack just days later, with CEO RJ Scaringe saying in an email to customers they were wrong and had broken their trust.
In his lawsuit, Crews alleged the email was a “futile attempt at damage control” and “would tarnish Rivian’s reputation as a trustworthy and transparent company.”
Rivian has not commented on the lawsuit.