Singapore's GIC Sues Nio in U.S. Over Alleged Revenue Inflation

Singapore’s sovereign wealth fund, GIC, has filed a lawsuit against Chinese electric vehicle manufacturer Nio in a U.S. federal court, accusing the company and its top executives of inflating revenue and violating securities laws.

The complaint, lodged in August in the Southern District of New York, names Nio, its Chief Executive Officer Li Bin, and former Chief Financial Officer Feng Wei as defendants. GIC alleges that the defendants made “materially false and/or misleading statements” about Nio's financial performance.

The lawsuit centers on Nio’s relationship with an affiliated entity, Wuhan Weineng Battery Asset. GIC claims Nio improperly recognized revenue by booking upfront the full value of batteries sold to Weineng for its battery-as-a-service (BaaS) subscription plan. The suit contends this revenue should have been recognized gradually over the life of the subscriptions.

According to the court documents, these accounting practices artificially inflated the value of Nio’s securities, leading to “significant losses” for GIC. The fund is seeking compensation for damages and reimbursement for its legal costs.

The allegations echo a 2022 report from short-seller Grizzly Research, which first raised concerns about Nio's accounting methods involving Weineng. The report led to a sharp decline in Nio's American depositary shares. Following the report, Nio announced it would form an independent committee to investigate the claims.

A judge has stayed the current case as it is similar to a class-action lawsuit filed against Nio in 2022. According to a report by Caixin, the GIC suit marks the first-known instance of a sovereign wealth fund suing a U.S.-listed Chinese company over such allegations.

GIC declined to comment on the matter. Nio did not immediately respond to a request for comment.