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Chinese Electric Car Maker Nio’s Shares Plunge on Short Seller Report

New York-based Grizzly Research alleged that China EV manufacturer Nio used creative accounting to inflate its net income margins. Nio said on Thursday the claims had no merit and ‘contained errors’.

Chinese Electric Car Maker Nio's ET7, the company's flagship sedan during its launch ceremony in Chengdu
The NIO ET7, the flagship sedan for the Chinese electric car manufacturer. photo: AFP


Nio stocks plunged in New York on Wednesday after a short seller argued in a report that the Chinese electric car company exaggerated its revenue and profitability.

New York-based Grizzly Research said Nio used creative accounting to inflate its net income margins.

Nio denied the allegations, saying the report is “without merit and contains numerous errors, unsupported speculations and misleading conclusions.”

The carmaker said it would “make additional disclosures in due course”.

The company’s shares rose more than 4% in late-morning Hong Kong trading on Thursday after the denial was issued. On Wednesday, the HKEX stock fell nearly 11.4%, while NYSE shares lost 2.6%.

READ MORE: Dramatic Nio Crash in Shanghai Spurs Debate – CnEVPost

Nio Cars: ‘Inflated Revenue’

Grizzly said Nio uses its Wuhan Weineng battery venture to inflate its numbers.

“We believe sales to Weineng have inflated Nio’s revenue and net income by [about] 10% and 95%, respectively,” the report said.
“Specifically, we find that at least 60% of its FY2021 earnings beat seems attributable to Weineng.”

The short seller said the scheme could not have occurred without Weineng’s participation. “Of course, it would take a willing potential accomplice to pull off such a scheme,” the report alleged.

“While Nio represents limited control over Weineng, we identified notable conflicts of interest between the two parties: Weineng’s top two executives currently double as Nio’s vice-president and battery operating executive manager.”


  • George Russell


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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.


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