Singapore’s sovereign wealth fund GIC Private Limited has filed a lawsuit against Chinese electric vehicle maker Nio Inc, alleging the company may have inflated revenue through its battery affiliate Mirattery. The case, first reported by Chinese media outlet Caixin, centers on Nio’s Battery as a Service (BaaS) model and the timing of revenue recognition.
GIC claims that Nio improperly recognized full battery sales revenue upfront via Mirattery, a joint venture established with CATL, Guotai Junan, and Hubei Science Technology Investment. The fund contends that if Nio had followed installment-based accounting methods, its reported financial performance would have been significantly lower, which in turn may have influenced the stock’s surge to historic highs in early 2021.
See also: Several Nio Smart Driving Executives Depart Amid Organizational Restructuring
The lawsuit, filed in August, was temporarily stayed in a U.S. court earlier this month pending the outcome of a prior class action lawsuit against Nio. The automaker is not required to respond until that case is resolved, and its legal team is currently handling the matter.
GIC acquired roughly 54.45 million Nio ADS shares between August 2020 and July 2022, a period when the stock experienced extreme volatility, rising more than tenfold to a peak of $66.99 in January 2021 before falling below $7. The lawsuit follows a June 2022 short-selling report from U.S. firm Grizzly Research, which alleged that Nio may have used an unconsolidated affiliate to exaggerate revenue and profitability.
See also: Nio Reports Record September Deliveries of 34,749 Vehicles, Q3 Sales Up 40.8%
Mirattery, launched in August 2020 alongside Nio’s BaaS service, manages leased battery assets for the EV maker. After the short-selling report, Nio faced two U.S. class action lawsuits later in 2022, which were consolidated in the Southern District of New York. A court ruling on Nio’s motion to dismiss those cases is still pending.
According to industry observers, GIC’s lawsuit may reflect the fund’s obligation to safeguard its assets and pursue accountability for potential losses sustained during periods of stock volatility.
Source: CNEVPOST
