NIO Stock Tumbles. Why This Lawsuit Is Rattling the Electric Car Maker’s Shareholders.

NIO co-founder and CEO Bin Li. (HECTOR RETAMAL/AFP via Getty Images)

Key Points

• NIO stock dropped 7.3% after Singapore’s GIC filed a lawsuit alleging artificial inflation of the Chinese electric car maker’s U.S. share price.
• GIC, which bought 54.5 million ADRs between Aug. 11, 2020, and July 11, 2022, claims prices were inflated by the defendants’ fraud.
• The lawsuit alleges NIO created Weineng Battery Asset Company to buy leased batteries, enabling the EV maker to book immediate revenue.

NIO stock was plunging on Thursday after Singapore’s sovereign-wealth fund filed a lawsuit alleging that the Chinese electric car maker had artificially inflated the price of its U.S. shares.

NIO American depositary receipts dropped 7.3% to $6.32 ahead of the New York open. Futures tracking the S&P 500 were 0.3% higher.

The move came after the Singaporean fund GIC filed a U.S. lawsuit seeking damages from NIO, and naming the company, CEO Bin Li, and CFO Wei Feng as defendants. The fund said it had bought 54.5 million ADRs between Aug. 11, 2020, and July 11, 2022, at prices that “were inflated artificially by Defendants’ fraud.”

GIC and NIO didn’t immediately respond to a request for comment from Barron’s.

GIC alleged that NIO solved a liquidity crisis in 2020 by creating a “superficially independent company” called the Weineng Battery Asset Company, which bought NIO’s leased batteries, allowing the EV maker to immediately book revenue from those sales.

The selloff could be a major blow for NIO stock. It had been on a good run with investors betting that the company can gain market share in China’s growing premium EV market.

As of Wednesday’s close, the ADRs were up 56% in 2025, compared with a 13% rise for the S&P 500.

Write to George Glover at george.glover@dowjones.com