Recently, the news that “Government of Singapore Investment Corporation (GIC) is suing NIO” has attracted market attention. According to reports, GIC, Singapore’s sovereign wealth fund, has filed a lawsuit in a U.S. court against NIO Inc., its CEO Li Bin, and former CFO Feng Wei, accusing them of securities fraud. It is learned that the court has currently stayed the proceedings of this case. After the announcement of this lawsuit, NIO’s U.S. and Hong Kong-listed shares both plummeted.
It is reported that the core dispute of the lawsuit focuses on NIO’s “Battery as a Service (BaaS)” model. Under this model, users purchase vehicles without batteries and lease batteries from WeNeng (a related entity of NIO). When NIO sells batteries to WeNeng, it recognizes the entire sales revenue at one time. GIC argues that the revenue should be recognized in installments over the user’s lease term (approximately 7 years). If calculated in accordance with GIC’s approach, NIO’s revenue in the fourth quarter of 2020 would be significantly lower than the 6.64 billion yuan disclosed in its financial report. NIO, however, insists that the control of the batteries has been transferred when sold to WeNeng, and its “performance obligation” has been fulfilled, so it is reasonable to recognize the revenue in a lump sum. Moreover, NIO stated that the related-party transactions have been disclosed in the financial report.
This lawsuit is not based on NIO’s recent business developments. The trigger can be traced back to June 2022, when U.S. short-selling firm Grizzly Research released a short report on NIO. On June 28, 2022, Grizzly Research issued a report claiming that NIO might have “falsified” its profitability through accounting methods, and it was likely using an unconsolidated related party to inflate its revenue and net profit margin.
At that time, NIO immediately issued an announcement stating that the report was worthless, containing numerous errors, unsubstantiated speculations, misleading conclusions and interpretations. NIO also announced that it had completed an independent internal review in response to the short report. The entire review process was conducted by an independent committee with the assistance of third-party professional consultants, including an international law firm and forensic accounting experts from a well-known forensic accounting firm (not NIO’s auditor). No improprieties were found, and all allegations were unfounded.
It is worth noting that this is not the first time GIC has filed a lawsuit against a listed company. As a sovereign fund with assets under management exceeding 100 billion U.S. dollars, GIC has filed lawsuits against listed companies on multiple occasions, accusing them of causing investment losses to GIC. According to public information, in recent years, a number of multinational companies including Qualcomm, Merck, Celgene, Viatris, and BP have been sued by GIC. An analyst from an investment institution pointed out that GIC’s legal actions often have dual purposes: on the one hand, it is a financial claim; on the other hand, it is part of its risk management strategy to hedge against potential investment losses through legal means during periods of market volatility.According to a report by Lianhe Zaobao, as of the end of March 2025, GIC’s 20-year annualized actual return rate was 3.8%, which has been below 4% for two consecutive years and is the lowest level since the 2020 fiscal year.
