Rivian (RIVN) clashes with Bosch in new legal battle over EV motors

EV maker Rivian (RIVN) is locked in a new legal battle with the world’s largest auto parts supplier, Bosch. Both sides traded lawsuits against each other as Rivian moves in its own direction.

In 2019, Rivian and Bosch signed an agreement to supply e-motors for its electric models, the R1T and R1S.

According to Crain’s Detroit Business, the two traded lawsuits after the relationship soured. With Rivian now producing its own e-motors, Bosch claims the EV maker was “secretly” planning to replace its product.

Rivian shot back, saying it was “choked off” by Bosch with insufficient supply, causing production issues and “cataclysmic” damage to the brand and its finances.

According to case files in Wayne County Circuit Court, the legal battle started in July after Bosch sued Rivian over breach of contract. On the same day, Rivian filed a lawsuit against the supplier, claiming breach of contract and damage to the brand’s value.

Bosch claimed the EV maker refused to pay reimbursements worth $204 million after Rivian began building its own e-motors.

Rivian blamed Bosch for its production woes that hampered output and led to only 24,337 vehicles being built in 2022.

Rivian and Bosch trade lawsuits as legal battle heats up

Bosch invested millions to revamp its plant in Germany as it geared up for e-motor production. It also established a new dedicated production line at its South Carolina plant (which I was invited to tour) to build electric motors for Rivian.

“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’s lawsuit read (via Crain’s Detroit Business).

Rivian canceled the contract in September 2023, according to Bosch, as it developed its own e-motors. Meanwhile, the company was preparing to fulfill its 200,000-unit supply agreement for 2024.

After Rivian introduced its in-house Enduro drive units, Bosch claimed the EV maker was “secretly” planning to replace its business despite months of silence on its future plans.

“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 lawsuit read. Bosch also said Rivian “refused” assistance and treated it as “a competitor for e-motors and e-axles.”

Rivian fires back

“At the very heart of Rivian’s vehicle design were four electric motors,” Rivian’s lawsuit said. “To supply these mission-critical, custom motors, Rivian turned to the largest and most established supplier of automotive parts in the world: Bosch.”

Rivian’s lawsuit added, “That was a mistake,” as the supplier sent over “unqualified personnel” and invested “insufficient resources” in its program.

As a result, Bosch failed to live up to its commitment, supplying just 101,000 EV motors in 2022, less than half of the requirement.

The lawsuit claimed Bosch “choked off” Rivian’s production lines during one of its most crucial moments, damaging the brand and its finances.

“Bosch made a calculated gamble to overpromise to multiple start-up electric vehicle companies on the theory that at least some of them would soon fail,” the lawsuit read.

Although Bosch claims it tried to help Rivian, the EV maker told a different story. Rivian engineers said one of the lines was “in shambles” during a visit to Germany and claimed Bosch was not using “industry standard technology.”

“Instead, Bosch had apparently employed teenage interns to stand by the line holding flashlights for quality control,” Rivian’s lawsuit stated.

The lawsuit cited a letter from Patrick Hermann, Rivian’s former director of procurement, sent to Bosch, saying its failure to deliver e-motors was “the #1 threat to our organization’s success.”

Rivian said it shifted to in-house e-motor production “To keep costs down and to place Rivian more in control of its own supply chain.” The lawsuit added that doing so would help prevent “supplier issues from constraining Rivian’s production in the future.”

Meanwhile, the EV maker cut its production target for 2024 due to a supply shortage. Rivian expects to build between 47,000 and 49,000 vehicles this year, down from its previous target of 57,000.