Tesla Inc. (TSLA) is pursuing litigation against the electric startup Rivian for unspecified damages due to alleged trade theft.
The electric car giant highlights what it calls a “disturbing pattern” of employees departing Tesla for Rivian and taking with them confidential information and trade secrets.
Rivian is considered one of the world’s most heavily financed startups receiving backing over the last year and a half for more than $5 billion. The company is expected to debut an electric pickup car and an SUV in 2021 before the availability of Tesla’s Cybertruck.
Since 2018, Rivian has hired nearly 2,400 employees from across the automotive and flight industries. According to the Tesla suit filed last week, 178 employees were former Tesla workers, with 70 people directly transferring to Rivian. Tesla highlighted four of those employees as defendants and identified more people as possibly stealing or bringing proprietary information to Rivian.
Tesla says it is seeking unspecified punitive damages for alleged “despicable, wanton, oppressive, willful, malicious, and duplicitous” conduct.
A spokesperson for Rivian said on July 23, “We admire Tesla for its leadership in resetting expectations of what an electric car can be. Upon joining Rivian, we require all employees to confirm that they have not, and will not, introduce former employers’ intellectual property into Rivian systems. This suit’s allegations are baseless and run counter to Rivian’s culture, ethos, and corporate policies.”
Last year, Tesla filed a suit against the recent Amazon-acquired Zoox for stealing confidential documents. Zoox reportedly settled the lawsuit for an undisclosed sum in April after admitting that four of its employees stole sensitive information from their previous employer, Tesla.
Oppenheimer analyst Colin Rusch noted on July 23, “We believe Tesla continues to extend its product and process technology advantages as it disrupts the transportation industry by being better, faster and cheaper than competitors.” He reiterated a Buy rating on Tesla’s stock and more than doubled his price target from $968 to $2209, which implies 56% upside potential.
Tesla’s stock is up 235% year-to-date with a Hold analyst consensus that breaks down into 4 Buy ratings versus 14 Hold ratings and 10 Sell ratings. The $1334.48 average price target suggests 6% downside potential for the shares in the coming 12 months. (See Tesla’s stock analysis on TipRanks).