NIO Refutes GIC Lawsuit as Baseless Allegations

NIO completed an independent internal review of the matter in 2022, found no misconduct, and determined that all allegations are unfounded.

NIO Inc. has dismissed recent reports of a lawsuit filed by Singapore’s sovereign wealth fund, GIC, calling the claims “unfounded.”

NIO clarified that the case is not a new development, nor is it related to the company’s current operations. Rather, it traces back to a short-seller report issued in June 2022 by Grizzly Research, which NIO has consistently maintained contained false allegations.

In a statement dated August 26, 2022, NIO said it had conducted an independent internal review with the assistance of a special committee, third-party international law firms, and forensic accounting firms. The review found no misconduct, and all allegations were deemed invalid.

According to publicly available information, GIC alleges that NIO, through its joint venture Wuhan NIO Power Asset Co., artificially inflated revenue and profits, misleading investors and causing financial losses for GIC.

Data shows that following the establishment of NIO Power, NIO’s fourth-quarter 2020 revenue rose from RMB 2.85 billion ($400 million) to RMB 6.64 billion ($930 million).

Between August 2020 and July 2022, GIC reportedly purchased 54.45 million NIO ADS shares, with estimated losses ranging from $500 million to $2 billion based on stock price fluctuations.

Insiders at NIO described the lawsuit as a continuation of the short-seller report from several years ago and expressed uncertainty about why the issue has resurfaced in the media. The U.S. Securities Exchange had previously inquired about NIO’s transactions related to NIO Power but took no further action.

Several financial institutions, including Deutsche Bank, Morgan Stanley, JP Morgan, and Daiwa Capital, have analyzed the Grizzly report and concluded that its claims lacked foundation. They highlighted misinterpretations of NIO’s battery asset management business (BaaS model).

Deutsche Bank stated that concerns regarding BaaS were “entirely unfounded, with the business model elements severely misunderstood.” Citibank noted that NIO Power’s battery lifecycle charging model undergoes due diligence and regular financial audits.

It is notable that GIC has previously filed lawsuits against other multinational corporations, including Qualcomm, Merck, NewGene Pharmaceuticals, and BP. Public court records indicate that most of these cases were settled or dismissed.

Following the news of the lawsuit, NIO’s share price fell more than 13% in intraday trading, ultimately closing down 8.99%.

However, the stock surged at today’s open, rising over 6% at one point. As of press time, shares were up 2.37% at HK$50.45 per share ($7.09), giving the company a market capitalization of HK$114.25 billion ($16.07 billion).