Electric car company Rivian is facing a shareholder lawsuit on allegations that it misled investors by not disclosing that it had underpriced its vehicles and would raise them after going public.
Shareholder Charles Crews brought the lawsuit, which was filed Monday in a California U.S. District Court, and is seeking class-action status. The complaint alleges that Rivian failed to disclose that the price of its two car models, the R1T and R1S, would increase by more than $12,000, and didn't disclose the potential damages resulting in this price change.
According to the complaint, Crews bought 35 shares in Rivian on its first day of trading in November at around $113 each. Now, shares in the vehicle company sit at around $42.
Rivian announced the price hike for future orders, including preorders, in a letter to customers on March 1, leading to widespread social media backlash and a drop in share prices. Rivian's CEO RJ Scaringe apologized in a statement two days later and reversed its decision for Rivian customers who placed their orders before March. Scaringe said the price increase was caused to the rising cost of manufacturing materials due to inflation.
"I have made a lot of mistakes since starting Rivian more than 12 years ago, but this one has been the most painful," Scaringe said in a statement on March 3. "I am truly sorry and committed to rebuilding your trust."
Rivian said in an email to Protocol that it does not respond to ongoing litigation.
Unlike many other EV manufacturers last year, Michigan-based Rivian went public in a traditional IPO, rather than through a SPAC merger. The company had more than $10 billion in funding with a valuation of $80 billion.