Rivian Securities Lawsuit Says EV Maker’s Overstatement of Product Demand Harmed Investors

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Rivian Automotive faces a proposed class action lawsuit that alleges the electric vehicle maker and certain executives unlawfully made materially false and misleading statements with regard to demand for the Tesla rival’s products and its overall ability to withstand macroeconomic headwinds.

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The 27-page lawsuit states that Rivian, in February, announced its fourth-quarter and full-year results for 2023 and stated it expected to produce 57,000 vehicles in 2024. This number was “significantly lower” than analysts’ projections of 80,000 Rivian pickup trucks and SUVs, the case notes.

Further, Rivian forecasted an adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) loss of $2.7 billion for 2024, higher than the $2.59 billion expected by analysts, the case says. Rivian also announced that it planned to axe 10 percent of salaried staff due to “economic uncertainty,” and CEO Robert J. Scaringe shared on an earnings call that historically high interest rates have “negatively impacted demand” for the company’s electric vehicles, the complaint states.

Scaringe also revealed that Rivian’s order bank has “notably reduced” due to increased deliveries in 2023 and the impact of cancellations stemming from “both the macroenvironment and [various] customer factors,” including delivery timing, location of order, monthly payments and customer readiness, the lawsuit says.

Upon this news, Rivian’s stock price sank nearly $4 per share, or more than 25 percent, on February 22, 2024, damaging investors financially, the case says.

As the lawsuit tells it, the alleged false and misleading statements from Rivian during the relevant time period include its overstatement of demand for its products and the automaker’s ability to withstand “negative, near-term macroeconomic impacts.” Moreover, Rivian failed to disclose that, as a result of the foregoing, its business was experiencing lower demand and higher customer cancellations due to high interest rates, the case says.

“[A]ll the foregoing was likely to, and did, negatively impact [Rivian’s] anticipated earnings and vehicle production targets for 2024,” the suit reads.

The lawsuit looks to cover all persons and entities who bought or otherwise acquired Rivian securities between March 1, 2023 and February 21, 2024.

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