Credit: Bloomberg

Electric vehicle startup Rivian announced on Thursday that it has settled a lawsuit with some of its investors. The company continues to deny allegations of making “materially untrue” statements during its inial public offering but says it agreed to pay $250 million to clear itself of distractions as it focuses on building its next EV, the mass-market R2, which is due next year.

Rivian was first sued by a shareholder in 2022 over claims that the startup knew it would cost far more for it to build each R1T electric truck and R1S electric SUV than the advertised $67,500 and $70,000 prices, respectively. A big surprise price increase would tarnish the nascent automaker’s reputation, the lawsuit claimed, and could lead to many of the almost 56,000 pre-orders being canceled.

Just a few months after its November 2021 IPO, the company had indeed issued a hefty price hike: $79,500 for the R1T and $84,500 for the R1S SUV. After an outcry, the company said it would honor the original price for its existing preorders. By that point, though, the damage was done, and more than a third of the company’s value was erased within a few days, the lawsuit alleged.

Rivian blamed “inflationary pressure” for the price increases. But the company’s former sales and marketing VP, who parted ways with Rivian in late 2021 after finding what she called a “toxic bro culture,” claimed in a lawsuit of her own that to Rivian management, “it was clear that the vehicles were underpriced, and each sale would result in a loss for the company” and that “they would need to raise the vehicle prices after the IPO.”

Rivian continues to deny that it made untrue statements in its IPO about the R1S and R1T pricing and said in a statement that while it is settling the case for $250 million, that “is not an admission of fault or wrongdoing. However, settling will enable Rivian to focus its resources on the launch of its mass market R2 vehicle in the first half of 2026.”