(Yicai Global) July 4 — Nio shipped a record number of new energy vehicles in June despite becoming the subject of a US short-selling report accusing the Chinese electric car startup of cooking its books. A number of global investment banks have cast doubt on the report’s claims.
Nio sold 12,961 EVs last month, a surge of 60.3 percent from the same period last year, to reach a monthly high, the Shanghai-based carmaker said on July 1. In the second quarter, sales jumped 14.4 percent year on year to 25,059 units. The firm has now logged positive growth for nine consecutive quarters.
“Nio is likely using an unconsolidated related party to exaggerate revenue and profitability,” US short seller Grizzly Research said in a report on June 28. Grizzly believes that Nio has used sales to Wuhan Weineng, a joint venture in which Nio holds a 19.8 percent stake, to inflate its revenue and net income.
Wuhan Weineng was set up in August 2020 by Nio and several other companies including battery giant Contemporary Amperex Technology to provide battery rental services for Nio car owners.
As of last September, Nio had sold 40,000 batteries to Wuhan Weineng, yet the JV only had 19,000 battery-as-a-service orders according to its recent fundraising prospectus, the Grizzly report said. Thus Nio shipped an excess amount of batteries to Wuhan Weineng, exaggerating its business revenue and net profit in the first nine months of last year by 10 and 95 percent, respectively, it said.
The report has misinterpreted the data and is based on incorrect information, the firm told Yicai Global on June 29. The EV startup has launched procedures against the short seller and will issue an announcement shortly, it said.
It is entirely possible that Nio had 40,000 BaaS users between the fourth quarter of 2020 and the third quarter of last year, Japanese financial services firm Daiwa Capital Markets said in a research report. Wuhan Weineng reported assets of 19,000 batteries in order to raise funds, it added.
Every battery held by Wuhan Weineng has a subscriber, US investment bank JP Morgan Chase & Co. said.
Nio’s third-quarter sales are expected to surge by as much as 80 percent from the previous quarter, and the firm should achieve a 30 percent year-on-year increase in the fourth quarter, New York-based JP Morgan said.
US investment bank Morgan Stanley maintains an “overweight rating” for Nio with a target price of USD31 per share.
Nio’s Hong Kong stock [HKG:9866] was trading down 4.07 percent at HKD165 (USD21) as of 12 p.m. China time today. The stock has lost 14 percent in value since the short-selling report was published. Its US-traded shares [NYSE:NIO] closed down 1.66 percent on July 1 at USD21.36 apiece.
Editors: Xu Wei, Kim Taylor