It will be up to a California court to determine the outcome of a long-running suit pitting two EV manufacturers, Tesla and Rivian. The bigger of the two has accused its rival of stealing trade secrets and a judge has ruled the case will have to go to trial after Rivian filed to get it dismissed earlier this week.
Rivian allegedly poached Tesla employees and then used them to gain access to trade secrets.
Rivian faces a potentially devastating legal battle filed against it by the giant of the EV market. Tesla in 2020 accused its smaller rival of both poaching employees and using them to access trade secrets.
After years of back-and-forth arguments, Rivian failed to convince a California court to dismiss the case this week. Instead, Judge Theodore C. Zayner of the Santa Clara County Superior Court declared Tesla has presented enough evidence to justify a trial.
“Tesla’s evidence establishes that some Rivian employees were less thoroughly investigated and not disciplined,” the judge wrote in a tentative ruling.
The case comes at a significant time for the two manufacturers, with Rivian appearing to gain ground against its rival in the marketplace as it becomes positioned as the “anti-Tesla.”
The accusations
Tesla and CEO Elon Musk, shown here at the Cybertruck sales launch, have aggressively responded to alleged trade theft.
Tesla zealously guards its trade secrets and has sued a number of rivals including China’s Xpeng and Zoox, the latter, a self-driving start-up, settled for an undisclosed amount after it was acquired by Amazon.
The dispute between Tesla and Rivian began four years ago when the smaller company was accused of not only hiring away Tesla employees but then making use of its trade secrets and proprietary data.
“Tesla has discovered disturbing pattern of employees who are departing for Rivian surreptitiously stealing Tesla trade secret, confidential, and proprietary information—information that is especially useful for startup electric vehicle company,” The automaker said
Along with Rivian, the suit named four defendants who had previously worked for Tesla. They allegedly passed on a variety of different documents and, in one instance, even kept a Tesla laptop after leaving the company.
Rivian denies the allegations
Rivian – CEO R.J. Scaringe shown here – insists it investigated the claims and took steps to prevent trade secret theft.
For its part Rivian has repeatedly denied the charges. It’s initial response to the Tesla lawsuit claimed that, “Upon joining Rivian, we require all employees to confirm that they have not, and will not, introduce former employers’ intellectual property into Rivian systems.”
The EV start-up has asserted in court filings that it conducted its own investigation and has taken corrective measures to ensure it has made no use of Tesla trade secrets. If anything, Rivian argues, the case is really about the Goliath of the EV industry attempting to crush a David that could deliver a serious challenge.
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What the court said
A judgement against Rivian could be devastating at a time when it is gaining traction against Tesla and preparing to launch its smaller, more affordable R2 SUV.
Unfortunately for Rivian, Judge Zayner was not convinced by the company’s arguments and rejected its effort to have Tesla’s lawsuit dismissed.
The evidence Rivian introduced to support its internal probe “does not conclusively establish that an investigation was adequate,” the judge ruled, indicating that the case needs to be resolved at trial.
What might happen next is uncertain but should the two sides fail to settle Tesla could demand millions, perhaps even billions of dollars in damages should the case go against its rival.
Tesla-Rivian rivalry heats up
If anything, the battle could have more at stake than it did when Tesla filed its lawsuit in 2020.
While Rivian has faced challenges, including a shortage of cash, it recently inked an alliance with Volkswagen that is set to yield it $5 billion by 2026. That money will help it expand production at a factory in Normal, Illinois, as well as launch more product lines, starting with the Rivian R2 SUV. That model directly targets Tesla’s best-seller, the Model Y.
Rivian has been seeing a growth in demand in recent months, something CEO RJ Scaringe said is the result of a “fairly saturated” market for the Model Y and Tesla’s similarly sized Model 3 sedan.
Others have pointed at Tesla CEO’s highly public politics. Using his social media site X – the former Twitter – Musk has vociferously supported from President Donald Trump’s reelection bid while also attacking Democratic and left-wing policies.
Scaringe and Rivian have actively avoided getting caught up in politics – beyond supporting federal efforts to build EV demand. Bloomberg recently declared the start-up the anti-Tesla, noting that it could win over potential EV buyers, many of whom lean towards the left on the political
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