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The Tesla-Rivian lawsuit explained

Written by Theo König – October 06, 2021

Reviewed by Kfir Kedem

A legal battle is brewing between the giant of the electric automotive world, Tesla, and it's direct, up-and-coming rival, Rivian.

The case is called Tesla Inc. v. Rivian Automotive Inc. and will be fought out in the California court of San Jose, in the Santa Clara County. It will oversee the plaintiff (Tesla) seek damages against the defendant (Rivian) on the counts of stealing trade secrets and intentionally interfering with contracts (a total of 2 counts aimed at Rivian), with a third count for breach of contract filed directly against 4 former Tesla employees who are now working at Rivian.

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Although the case was initially filed on the 17th of July 2020, it has been out of the media spotlight until recently, when Tesla added further charges on September 28th. At the time of the initial filing, Tesla accused Rivian of stealing highly confidential trade secrets through the hire of previous Tesla employees. The issue escalated two weeks ago, when, according to Bloomberg, Tesla claimed to have proof of an instance where an ex-Tesla employee was “caught red-handed” stealing the core technology for its next-generation batteries, “the most essential element for any electric vehicle.” Tesla argue that the initial charges have failed to deter Rivian in its actions, and reasserted accusations of Rivian continuing to loot intellectual property since the suit was filed – an allegation which a California state judge has allowed to be added these further charges.

The legal filing names 4 previous Tesla employees, now working at Rivian, directly in the filing. Tesla claims that a total of 173 ex-Tesla employees now work for Rivian, with roughly 70 joining Rivian as direct hires from Tesla. Furthermore, “13 of Rivian's recruiters are former Tesla employees, and would thereby have knowledge of the type of information that Tesla employees have access to and what information could be useful to Rivian.”. Rivian has a total number of employees of approximately 2,300, according to the suit.

In response to the initial claims, Rivian stated, “For several of its trade secrets [Tesla] has provided so little detail that Rivian is unable to ascertain what Tesla is claiming as its intellectual property, let alone whether what it is claiming is or could be secret,” according to Bloomberg.

As is common practice in most competitive industries, Tesla requires all its employees sign Non-Disclosure Agreements (NDAs) as a condition of employment. Tesla argue that there have been several breaches of these NDAs (and the Tesla Code of Ethics) when the defectors transferred classified documents to their personal Gmail accounts, personal cloud-based storages, and when they exported documents from their Tesla computers, after having accepted positions at Rivian. The documents in question cover a wide range of subjects, from Tesla recruitment techniques, to manufacturing robotics, to tool design, to automation procedures.

Rivian has yet to respond to the latest set of accusation. The news comes at an inopportune time for Rivian, however, as they see to go public with an IPO for which they officially filed the so-called S-1 file with the SEC last week. The company, backed by billions of dollars by Amazon Inc. and Ford Motor Company, amongst many others, began rolling out the first of their flagship vehicle – the R1T – last month. Meanwhile, Tesla announced on Saturday a record-breaking number of deliveries on their 3rd quarter vehicle sales, despite the on-going semiconductor chip shortage.

Auto Trendy’s take:

We certainly will not be speculating on the outcome of an on-going case. Many of the filings are currently available on the internet, and we recommend our legally savvy readers to have a look for themselves (some of the descriptions of intellectual property theft are very, very juicy). Regardless of the outcome, the allegations will be damaging to Rivian’s reputation. However, considering that they are in the midst of an Initial Public Offering and preoccupied with the roll-out of the R1T (all of this on top of continued development of the R1S), Rivian might have bigger fish to fry. Our impression is that Tesla might prefer a public showing (rather than an out-of-court settlement) as a way of sending a message to its rivals that the time has come to stop poaching its employees.

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