Costly Clarity: Rivian Settles IPO Fraud Suit for $250 Million While Cutting Jobs to Focus on R2 SUV Launch

Rivian Automotive has agreed to pay $250 million to settle a class-action lawsuit filed in 2022 by shareholders who claimed the company misled them about its pricing strategy during its 2021 initial public offering (IPO). Court filings released Thursday revealed that the electric vehicle manufacturer reached the agreement to avoid a prolonged legal battle.

In the filing, Rivian reiterated that the settlement does not imply any acknowledgment of wrongdoing. The company maintained its position that the accusations were unfounded but said resolving the dispute now would allow it to focus its efforts on upcoming projects, including the rollout of its next vehicle line.

The original complaint alleged that Rivian failed to disclose that the initial prices of its R1S SUV and R1T pickup were too low to cover production costs. The issue surfaced publicly in March 2022 when the company unexpectedly announced significant price increases — raising the R1S from about $70,000 to $84,500 and the R1T from $67,500 to $79,500.

The sudden price hikes sparked backlash from early customers and triggered a steep decline in the company’s stock, which lost roughly 39% of its value in the ten days following the announcement. Attorneys representing investors said the $250 million settlement — funded through Rivian’s available cash and insurance policies for its executives — represents a meaningful recovery compared to what might have been awarded at trial.

The announcement of the settlement coincided with new cost-cutting initiatives at the company. On the same day, Rivian disclosed plans to trim approximately 4.5% of its workforce, eliminating more than 600 jobs as part of a broader restructuring strategy.

These measures are intended to improve operational efficiency and prepare for the introduction of the R2 SUV, a smaller and more affordable model expected to debut in the first half of 2026. The success of the R2 is considered vital to Rivian’s long-term financial health, particularly as the company faces slowing demand for electric vehicles and reduced federal tax incentives.

In addition, Rivian continues to deal with supply chain challenges and higher costs for imported auto components, which have added pressure to its pricing and profitability outlook.