It has reversed the pricing but the damage to its reputation has been done.
We can all agree that Rivian has not had the strongest start to the year. Things were looking good when we drove the R1T late last yearand then saw the truck having fun in the snow to start 2022. But just shortly after that, it was revealed that the company was struggling to get its cars off the production line. As a result of this, its substantial stock value began a steady decline.
Shortly after that, it was met with massive pushback from the locals after it announced that it had plans to construct a new $5 billion production facility in Georgia. In the last few days of February, an agreement was found between the company and the state of Georgia for the new plant. But then, Rivian went and jacked up all its prices, causing big problems.
It cited the reason for this to be that it had not adjusted its initial 2018 pricing for the current rate of inflation. As you can expect, this was met with massive outrage that resulted in its stock price lowering ever further.
Rivian acted fairly quickly by reversing the increases but it looks as if the damage has already been done. This particular situation is so severe that it has now been revealed a shareholder in the company is filing a case against Rivian for not informing investors that the products were underpriced.
As reported by Reuters, shareholder Charles Larry Crews filed a complaint with the U.S. District Court of San Francisco stating that Rivian was not transparent about the pricing of its products.
He suggests that the brand intentionally raised the cost of its cars shortly after its IPO became public last November. More than 30 defendants have been named in the lawsuit such as Scaringe and lead IPO underwriters JPMorgan Chase, Goldman Sachs, and Morgan Stanley.
Crews, who purchased 35 shares in the company on opening day, adds that Rivian's decision to make its range more expensive "would tarnish Rivian's reputation as a trustworthy and transparent company." As we saw, the result of this decision did result in some of 55,400 reservation holders canceling their orders. Crews also classifies the reversal of the price increase as a "futile attempt at damage control."
Hopefully, Rivian can get past yet another setback.