Nio Shares Plunge Following Serious Legal Allegations

Nio's stock is experiencing a dramatic selloff after Singapore's sovereign wealth fund, GIC, filed a significant lawsuit. The legal action accuses the Chinese electric vehicle manufacturer of artificially inflating its revenue figures by hundreds of millions of dollars. This development triggered a wave of investor panic, with the stock shedding approximately 3.5% in a single trading session on Tuesday.

Despite the legal challenges, Nio continues to post impressive operational results. The company's strategic expansion across multiple brands—Nio, ONVO, and firefly—is demonstrating positive traction. Furthermore, CEO William Li has publicly targeted reaching profitability by the fourth quarter of 2025. Recent delivery figures underscore this operational strength:
* The company delivered 34,749 vehicles in September.
* This represents a substantial year-over-year increase of 64.1%.

The Core of the Accusations

The lawsuit from GIC alleges that Nio engaged in the manipulation of revenues and profits totaling around $600 million between 2020 and 2022. The fund asserts this constitutes clear securities fraud. The specific accusation is that the automaker improperly recognized revenue from transactions with its partner, Wuhan Weineng Battery Asset Co., ahead of schedule. These transactions were reportedly part of Nio's widely promoted "Battery-as-a-Service" business model.

Nio has issued a sharp rebuttal to these claims, dismissing them as "old allegations in new packaging." The company points to a similar report published by Grizzly Research back in 2022. At that time, an independent committee investigated the accusations and ultimately deemed them to be without merit. For now, the court proceedings have been temporarily suspended, pending a resolution in a parallel class-action lawsuit.

Should investors sell immediately? Or is it worth buying Nio?

Market Outlook and Investor Dilemma

The critical question for the market is whether Nio's strong operational performance can outweigh the substantial legal overhang. These legal uncertainties pose a significant threat to the company's capital-intensive expansion strategy, particularly if they erode crucial investor confidence.

All eyes are now on the quarterly results scheduled for November, which will serve as a crucial test of Nio's ability to meet its operational targets despite the legal pressure. Market experts are divided in their assessment; some maintain "Buy" recommendations, while a larger number advise a "Hold" stance. From a technical analysis perspective, the recent price decline has firmly established a bearish trend for the shares.

The coming weeks will determine if Nio is poised for a recovery or faces further declines. One outcome, however, is already certain: the allegations have fundamentally damaged confidence in the financial reporting of this electric vehicle pioneer.