Nio’s share price plunges as Singapore’s sovereign wealth fund takes rare legal action against the Chinese automaker.
Singapore’s sovereign wealth fund GIC has filed a lawsuit against Chinese electric vehicle (EV) manufacturer Nio Inc. and two of its top executives, alleging that the company inflated its revenues and misled investors through false disclosures and questionable accounting practices.
The case, filed in August 2025 at the US District Court for the Southern District of New York, names Li Bin, Nio’s founder and Chief Executive Officer, and Feng Wei, the company’s former Chief Financial Officer, as defendants.
According to court filings, GIC claims that Nio and the executives “made materially false and misleading statements” about the company’s financial results and concealed critical information regarding its business operations and relationship with an affiliated entity called Nio Battery Asset Co., known in Chinese as Weineng.
Allegations: Inflated Revenue Through an Affiliate
At the center of the lawsuit is Nio’s battery subscription model, which allows customers to buy an electric car without a battery — reducing the upfront price — and instead lease the battery separately through a monthly subscription plan.
GIC alleges that Nio established Weineng in 2020 with several partners, including CATL, Hubei Science Technology Investment Group, and a subsidiary of Guotai Junan International Holdings. Each partner held a 25% stake, but GIC contends that Nio had a disproportionately larger economic interest and exercised control over Weineng, which was its sole source of revenue.
The lawsuit claims that this structure enabled Nio to sell batteries to Weineng upfront and immediately recognize the full sales revenue, even though the end users — the drivers leasing the batteries — would only make payments over time.
By doing so, Nio allegedly pulled forward years of revenue that should have been recognized gradually throughout the battery subscription period, estimated to last about seven years.
“This accounting maneuver allowed Nio to artificially inflate its reported revenue and earnings figures, misleading investors about the company’s true financial health,” the complaint states.
GIC further accuses Nio of failing to disclose its control and financial interest in Weineng, calling it a “superficially independent” firm. The fund asserts that Nio installed its own senior managers in key roles at Weineng to ensure decisions aligned with Nio’s interests.
GIC’s Position: “Tremendous Losses”
GIC said that as the truth about Nio’s relationship with Weineng began to surface through media reports and independent research, the value of Nio’s securities plummeted, causing the fund to suffer “tremendous losses.”
The fund is seeking compensation for all damages and legal expenses incurred as a result of what it describes as Nio’s wrongful acts and omissions.
A spokesperson for GIC declined to comment on the ongoing litigation. Nio has also not issued an official response to the lawsuit.
Market Reaction: Shares Tumble
News of the lawsuit triggered a sharp market reaction. Following a report by Chinese financial magazine Caixin, Nio’s Hong Kong-listed shares tumbled more than 13% on October 16, marking their largest single-day drop in six months.
The stock closed at HK$47 (US$6.05) — its lowest since early September — and was the biggest loser on both the Hang Seng Tech Index and Hang Seng Automobile Index, which fell 1.5% and 1.7% respectively.
Nio’s shares on the Singapore Exchange also fell nearly 10%, while its US-listed American depositary receipts slid more than 9%.
The sell-off reflected investor anxiety not just about the lawsuit but also about Nio’s long-term financial stability amid intensifying competition in China’s EV market.
“The allegations triggered renewed concerns over Nio’s governance and financial reporting, contributing to the stock’s extended decline,” said Ravi Wong, First Vice President at Yan Yun Family Office.
“Given the ongoing price war in China’s EV market, Nio’s fundamentals are not strong enough to absorb this kind of reputational shock.”
Background: Nio’s Financial Struggles
Founded in 2014, Nio has positioned itself as a premium Chinese EV maker known for innovation and cutting-edge battery technology. It went public on the New York Stock Exchange in 2018, raising over US$1 billion in its initial public offering.
The company introduced the world’s first large-scale battery-swapping network, enabling drivers to replace depleted batteries within minutes rather than waiting hours for recharging.
While the model has been praised for convenience, it has also contributed to financial strain, as batteries account for 30% to 40% of the total cost of an EV. In 2020, Nio reportedly faced a liquidity crisis, which was one of the reasons behind its creation of Weineng — to remove depreciating battery assets from its balance sheet and improve short-term financial metrics.
Despite raising over US$1.2 billion in a share sale just last month, Nio has yet to post an annual profit. Analysts note that the firm continues to rely on external funding and government support to sustain operations.
Previous Allegations and Investigations
The GIC lawsuit echoes claims made earlier by Grizzly Research, a New York-based short-seller, which published a report in 2022 accusing Nio of manipulating financial results through its transactions with Weineng.
Grizzly Research alleged that Nio used the Weineng structure to “juice its numbers” by booking seven years’ worth of revenue immediately after selling batteries to the affiliate.
“Instead of recognizing revenue over the life of the subscription (~7 years), Weineng allows Nio to recognize revenue from the batteries they sell immediately,” Grizzly’s report stated.
Following those allegations, Nio said it had launched an independent internal review, which concluded that the claims were unsubstantiated.
However, GIC’s lawsuit now adds weight to those earlier accusations, particularly because it represents a major institutional investor taking legal action — a highly unusual move in the sovereign wealth fund industry.
According to Caixin, this may be the first-ever case of a sovereign wealth fund suing a Chinese company listed overseas, reflecting growing tensions between global investors and Chinese firms over corporate governance and disclosure standards.
Legal Developments
Court filings indicate that GIC’s case has been temporarily stayed by a judge, pending the outcome of an earlier class-action lawsuit filed against Nio in 2022 over similar issues.
Nonetheless, analysts say GIC’s involvement could increase pressure on regulators and auditors to revisit how EV companies in China structure their battery-leasing businesses and recognize related revenue.
“Being sued by GIC will obviously be negative for sentiment on the stock,” said Vey-Sern Ling, Senior Equity Adviser for Asia Technology at Union Bancaire Privée.
“But such lawsuits are not uncommon and often end in settlements. The key question is whether Nio’s accounting practices comply with US GAAP standards, given its control over Weineng.”
Implications for the EV Industry and Global Investors
Nio’s predicament underscores the increasing scrutiny Chinese companies face as they seek international capital amid heightened geopolitical and regulatory pressure.
For investors, the lawsuit serves as a reminder of the risks associated with complex corporate structures and related-party transactions, especially when transparency and governance are questioned.
For GIC, the case signals a more assertive approach to investor protection, marking a potential shift in how sovereign funds manage accountability and stewardship in global markets.
If successful, the lawsuit could set a precedent for other institutional investors — including pension funds and sovereign funds — to pursue legal action against portfolio companies accused of financial misconduct.
“This case is not only about Nio’s accounting; it’s about trust and governance in an increasingly interconnected investment landscape,” said one Singapore-based analyst familiar with the matter. “It may push other sovereign investors to rethink how they oversee their overseas holdings.”
As Nio continues to battle weak demand, falling margins, and intensifying competition from domestic rivals such as BYD, Li Auto, and Tesla China, the lawsuit adds another layer of uncertainty to its recovery path.
For now, the company faces the dual challenge of restoring investor confidence and ensuring its accounting practices meet global standards — all while navigating one of the world’s most competitive EV markets.
Whether GIC’s legal move will lead to a financial settlement or a broader reckoning on corporate transparency remains to be seen, but one thing is clear: the era of passive sovereign investors may be coming to an end.
References
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Channel News Asia – “Singapore’s GIC sues Chinese EV maker Nio for allegedly inflating revenues.”
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Bloomberg – “Singapore Wealth Fund Accuses EV Maker Nio of Inflating Revenue.”
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Caixin Global – “GIC Lawsuit Against Nio Highlights Investor Concerns Over Governance.”
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CNBC – “Nio shares plunge 9% after Singapore’s GIC accuses Chinese EV maker of inflating revenue.”
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Grizzly Research – “Nio Inc.: The Power of Pulling Forward Revenue.”
