The Nio logo is seen at the Nio booth at the National Exhibition Center in Shanghai, China, on April 28, 2025, during the Shanghai Automobile Show 2025.
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Hong Kong-listed shares of Nio plunged nearly 9% after Singapore’s sovereign wealth fund GIC sued the Chinese electric vehicle maker for allegedly violating securities laws by inflating its revenues.
The lawsuit named Nio’s CEO Li Bin and former Financial Officer Feng Wei as defendants, according to a court document filed in August in the Southern District of New York court.
The complaint alleged that Nio unlawfully recognized over $600 million of leased battery revenue from “a superficially independent” battery asset firm Weineng, which Nio controlled, but it did not disclose its interest in the firm.
Nio “issued materially false and misleading statements and omissions that misrepresented NIO’s relationship to Weineng and the Company’s true revenue and earnings figures,” which artificially inflated the value of Nio’s securities, the lawsuit stated.
As a result, GIC — which purchased shares of Nio between Aug. 11, 2020, and July 11, 2022 — suffered “tremendous losses,” according to the lawsuit.
Shares of Nio on the Singapore Exchange closed 9.5% lower.
CNBC reached out to GIC and Nio for comment but did not hear back.
Allegations of pulling forward revenue
Nio offers a battery subscription model, allowing customers to buy its car without a battery at a lower cost and lease the battery separately through a monthly subscription plan.
According to the lawsuit, Weineng was created to buy the leased batteries from Nio, so customers effectively leased them from Weineng.
The battery asset company was co-founded in 2020 by the defendants and three investors: Nio’s battery supplier CATL, Hubei Science Technology Investment Group, and a subsidiary of investment bank Guotai Junan International Holdings. Each investor held a 25% stake.
The complaint alleged that Nio had “a disproportionately larger economic interest in Weineng” than the other founders and controlled it as Weineng’s only source of revenue.
The arrangement, it said, allowed Nio to record years of subscription revenue upfront while removing depreciating battery assets from its balance sheet, in violation of securities laws. The company should have recognized the revenues in installments as customers paid for leases over time, the lawsuit argued.
It also claimed that Nio installed several of its own senior managers at Weineng to ensure that the affiliate acted in Nio’s interests.
Additionally, it argued that Nio should have consolidated Weineng’s revenues into its financial statements due to its controlling stake.
In 2022, short-selling firm Grizzly Research made similar claims, alleging that Nio had inflated revenue and boosted net income margins to meet targets.
“Instead of recognizing revenue over the life of the subscription (~7 years), Weineng allows NIO to recognize revenue from the batteries they sell immediately. Through this arrangement, we think NIO has juiced its numbers by pulling forward 7 years of revenue,” the report said.
GIC’s case against Nio is on hold after a judge ordered a temporary pause, according to an Oct. 3 court filing.
Correction: This story has been updated to reflect that GIC started purchasing Nio shares in 2020. The previous version misstated the year.