Rivian Fails to Pay $204M After In-House Motor Shift, Supplier Alleges

Rivian faces a $204 million lawsuit from former supplier Bosch, which alleges the electric vehicle maker failed to pay agreed reimbursements after canceling a motor supply deal to produce motors in-house. The dispute intensifies Rivian's ongoing production challenges amid industry-wide part shortages.

Rivian Sued Over $204M Reimbursement for Canceled Motor Deal

An ex-supplier of Rivian's electric motors is presently suing the EV manufacturer, alleging that Rivian did not fulfill its obligation to pay a reimbursement clause for contract cancellations.

Last year, Rivian took steps to manufacture its electric vehicle motors internally, thus terminating a supply agreement with Bosch due to the company's "reckless failures" in meeting the company's demand.

Bosch Alleges Stranded Capital and Revenue Loss

Now, according to Automotive News, Bosch is asserting that Rivian has left the business with substantial stranded capital and a revenue gap due to the company's refusal to pay $204 million in reimbursements for the canceled plans.

In July, Bosch filed a lawsuit against Rivian for contract breach; the carmaker swiftly responded by suing the supplier as well. In its countersuit, Rivian stated that Bosch was to fault for production difficulties, claiming that a 30,000-unit reduction in expected output was caused by the company's inability to fulfill the electric motors deal.

Bosch's Investments in Motor Production

Bosch initially made the electric motors for Rivian after spending millions of dollars building a plant in Germany as part of the cooperation. Additionally, the unit production was aided by the construction of a 30,000-square-foot production line at the company's South Carolina location.

"Given these significant investments and that Rivian was an electric vehicle startup that had never manufactured vehicles before, Rivian contracted to reimburse Bosch for all its unamortized costs should Rivian cancel the program early," Bosch stated in the lawsuit.

Secret Plans and Contract Breach Allegations

Bosch was supposed to produce 200,000 motors for Rivian this year, but the carmaker formally terminated the agreement in September of last year. Even though Rivian had previously assured Bosch that their Enduro e-motor systems would work in conjunction, Bosch asserts in the lawsuit that Rivian had "secretly" intended to switch out the supply for its own system.

As noted by Teslarati, the company has also stated that Rivian's production problems have been caused by a lack of semiconductors, not by its e-motors.

Rivian Struggles With In-House Motor Production

"While Rivian’s choice to cut costs and develop a new product may be understandable, Rivian cannot simply ignore its contractual duties to reimburse Bosch," the company states.

In a statement to Automotive News affiliates at Crain's Detroit Business, Rivian and Bosch both chose not to comment on the legal attempts.

Even though the purchase was canceled, Rivian has still had trouble making the motors. Earlier this month, the company cut its production target for the year by 8,000 to 10,000 units, aiming for 47,000 to 49,000 instead. The carmaker said that manufacturing of both the R1 and van units had been affected by an increasingly challenging parts scarcity.