Singapore’s GIC Sues China’s Nio for Allegedly Inflating Revenues — Shares Plunge Amid Investor Concerns

Singapore’s sovereign wealth fund GIC has filed a lawsuit in the United States against Chinese electric vehicle (EV) manufacturer Nio Inc. and two of its senior executives, accusing them of inflating company revenues through misleading financial statements and undisclosed dealings with an affiliated battery asset firm.

The complaint, filed in August with the U.S. District Court for the Southern District of New York, names Nio’s founder and CEO Li Bin and former Chief Financial Officer Feng Wei as defendants. According to GIC, the executives misled investors about the company’s true financial condition and corporate structure, violating U.S. securities laws.

News of the lawsuit triggered a sharp selloff in Nio’s stock. In Hong Kong, shares plunged as much as 10%, marking the steepest single-day drop in six months. On the Singapore Exchange, Nio’s stock fell nearly 8%, while the Hang Seng Tech Index and the Hang Seng Automobile Index closed down by 1.5% and 1.7%, respectively.

The decline followed an investigative report by Chinese financial publication Caixin, which detailed GIC’s claims. Nio has yet to respond to the allegations, while GIC declined to comment beyond the court filing.

Allegations of Misleading Financial Reporting

At the heart of the lawsuit is Nio’s relationship with an affiliated entity called Nio Battery Asset Co., or Weineng in Chinese, which manages the company’s battery-as-a-service (BaaS) model. This system allows customers to buy vehicles without batteries and pay a monthly subscription to swap depleted batteries for fully charged ones at dedicated stations — a strategy that has helped Nio compete with Tesla in China’s crowded EV market.

GIC alleges that in 2020, as Nio struggled with a liquidity crunch, its executives arranged for Weineng to purchase all of the EV batteries the firm had leased to customers. By recording the full value of those battery sales as revenue — even though end users paid gradually through subscription fees — Nio artificially inflated its financial results.

According to the lawsuit, the company’s controlling interest in Weineng made these transactions effectively self-dealing, and the failure to disclose this affiliation misled investors about the company’s true revenue and earnings. GIC claims it suffered “tremendous losses” when the true financial situation was revealed.

The GIC lawsuit echoes claims first raised in a 2022 report by U.S.-based short-seller Grizzly Research, which similarly accused Nio of using Weineng to inflate revenue. That report triggered an earlier class-action lawsuit, and a judge has temporarily stayed the GIC case because it overlaps with issues already being litigated.

Nio’s financial challenges stretch back to early 2020, when its battery-swapping model demanded significant upfront capital and left the company facing severe liquidity issues. Batteries account for roughly 30–40% of each vehicle’s total cost, which analysts say intensified pressure to adopt aggressive accounting practices to maintain investor confidence and access to financing.

The lawsuit by GIC — one of the world’s largest sovereign wealth funds — marks a rare example of the fund taking legal action against a portfolio company. It also highlights growing scrutiny of Chinese companies listed overseas, particularly around financial transparency, corporate governance, and investor protection.

Should GIC’s allegations hold up, the case could have wider consequences for foreign investor confidence in China’s capital markets and the EV sector.

More About Nio 

Founded in 2014 and listed on the New York Stock Exchange in 2018, Nio is known for its luxury EVs and pioneering battery-swap technology, which allows drivers to replace depleted batteries within minutes rather than waiting hours to recharge.

While this innovation positions Nio as a major rival to Tesla in China, it also ties up substantial capital and has contributed to its financial volatility. The GIC lawsuit adds further pressure to Nio’s operations as the company navigates mounting legal and regulatory scrutiny.

The outcome of this case could take months — or even years — to resolve, but it is already one of the most high-profile legal challenges between a sovereign wealth fund and a Chinese corporate giant, with implications that extend well beyond the courtroom.