Rivian is facing a new lawsuit from one of its shareholders. Filed in U.S. District Court in San Francisco on Monday, the lawsuit claims Rivian misled investors during its initial public offering (IPO) last year, a move that ultimately led the company to raise prices last year. last week and then cancel them a few days later.
In his lawsuit, shareholder Charles Larry Crews alleges that the automaker has not publicly disclosed that it has undervalued its vehicles and is expected to raise prices shortly after its IPO in November 2021.
The admission that Rivian undervalued their vehicles came from former executive Laura Schwab. In a lawsuit filed in November claiming she was fired for raising concerns about the “toxic brother culture” at the company, Schwab said she tipped off executives about their pricing structure.
“First, it was clear that the vehicles were undervalued and that every sale would result in a loss for the business. Ms. Schwab eventually contacted Dennis Lucey, Rivian’s chief financial officer, and worked with him to develop projections showing the magnitude of the loss the company would suffer 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 (Senior Product Manager),” her lawsuit said. (via Automotive News)
Having dismissed her concerns, 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, prompting a massive backlash from their most loyal supporters.
The criticism was enough for Rivian to backtrack a few days later, with CEO RJ Scaringe telling customers in an email that 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 reliable and transparent company.”
Rivian has not commented on the lawsuit.
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