Rivian filed a complaint against Commercial Vehicle Group, alleging that the supplier violated a contract and nearly doubled prices on a custom seat package bound for the electric vans its producing for Amazon and potentially other commercial customers.
WSJ was the first to report on the complaint, which was filed March 9 in the Wayne County Court in Michigan. Commercial Vehicle Group claims in a court filing that it isn’t contractually obligated to the initial agreed-upon price.
Rivian warned in the complaint that if the dispute is not resolved it may be forced to shut down the commercial van program, causing imminent and irreparable harm to the company and its other suppliers.
News of the complaint sent Rivian shares down 7% Monday.
Rivian is producing the R1T electric pickup truck and R1S SUV for consumers. It also has a contract with Amazon, which owns about 18% of Rivian, to supply the e-commerce giant with 100,000 electric vans by 2030. Rivian also plans to begin selling its electric delivery vans to other commercial customers in 2023.
Production of the Amazon-Rivian Prime Van, or RPV, would be delayed if a new supplier had to be found for the custom package, which includes the seat, surrounding trim and jump seat, Rivian states in the initial complaint. Rivian added that the seat package includes “safety-critical” components that require well over a year of testing before Rivian can validate them in production vehicles.
A Rivian spokesperson said CVG has continued to supply seats to Rivian, and the parties are discussing a resolution.
Rivian claims in the complaint that Commercial Vehicle Group was supplying the company with the seat packages at the agreed-upon price. In February that changed and Rivian alleges CVG “held its supply hostage and threatened to stop shipment of all seat packages to Rivian” unless the automaker agreed to pay about twice the price.
Rivian did issue orders “under protest” for seat packages at the higher price to avoid supply interruption. However, the complaint alleges that CVG refused to honor those spot purchase orders until Rivian agree to release CVG of any breach of contract claims.
A motion hearing is scheduled for May 17, according to the court.