On June 28, the research firm Grizzly Research mentioned NIO as Short following the report where the firm claimed that the EV maker is “likely using an unconsolidated related party” to inflate its revenue and also the profitability.
The company announced on Friday that the independent committee of the board of directors has concluded that these allegations were not substantiated.
“NIO Inc. (NYSE: NIO; HKEX: 9866; SGX: NIO) (“NIO” or the “Company”), a pioneer and a leading company in the premium smart electric vehicle market, today provided an update on the status of the previously announced independent internal review. As previously disclosed, shortly after the publication of a report issued by the short-seller firm Grizzly Research LLC on June 28, 2022 (the “Short Seller Report”), an independent committee of the board of directors (the “Independent Committee”), consisting of independent directors Mr. Denny Ting Bun Lee, Mr. Hai Wu, and Ms. Yu Long, was formed to oversee an independent internal review regarding the key allegations made in the Short Seller Report (the “Internal Review”). The Internal Review was performed by the Independent Committee with the assistance of third-party professional advisors including an international law firm and forensic accounting experts from a well-regarded forensic accounting firm that is not the Company’s auditor. The Internal Review is now substantially complete. Based on findings of the Internal Review, the Independent Committee has concluded that these allegations were not substantiated”.
On July 11, the EV maker said it has decided to “form an independent committee, consisting of independent directors to oversee an independent investigation regarding the allegations made in the Short Seller Report”. NIO added that will provide updates on the Independent Investigation in due course consistent with the requirements of applicable rules and regulations of the three Exchanges.
“The Independent Committee has retained independent professional advisors to assist with the Independent Investigation, including an international law firm and a well-regarded forensic accounting firm,” the company added.
In addition, NIO also reiterated its “continued and unwavering commitment to maintaining high standards of corporate governance and internal control, as well as transparent and timely disclosure in compliance with applicable rules and regulations”.
As a first reaction, the EV maker answered on the day after saying the report “contains numerous errors, unsupported speculations, and misleading conclusions and interpretations”.
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NIO’s First Statement
“The report is without merit and contains numerous errors, unsupported speculations and misleading conclusions and interpretations regarding information relating to the Company. The Company’s board of directors, including the audit committee, is reviewing the allegations and considering the appropriate course of action to protect the interests of all shareholders. The Company will make additional disclosures in due course consistent with the requirements of applicable rules and regulations of the Securities and Exchange Commission, the New York Stock Exchange, The Stock Exchange of Hong Kong Limited (the “SEHK”) and the Singapore Exchange Securities Trading Limited (the “SGX-ST”)”, NIO wrote.
“The Company emphasizes its continued and unwavering commitment to maintaining high standards of corporate governance and internal control, as well as transparent and timely disclosure in compliance with applicable rules and regulations”, the company concluded.
During a Twitter Space held after the release of the report, the research firm CEO Siegfried Eggert was answering some questions from investors and enthusiasts of the electric vehicles sector. When the CEO of Grizzly Research was asked about how many vehicles NIO has on the roads as of today and replied “100,000 vehicles”.
Although we don’t know the exact number of vehicles that NIO has delivered as of June 28, it is certainly much more than the 100,000 mentioned by Grizzly Research. On April 7, 2021, the company announced the production of the 100,000th vehicle. Six weeks ago (May 15) NIO delivered its 200,000th vehicle and ended the month with cumulative deliveries of 204,936 vehicles — after delivering 7,024 units in May 2022.
In fact, the number mentioned by Grizzly Research was achieved 14 months ago (April 2021) and the EV maker should have around 215,000 – 217,500 vehicles on the road, 115,000 more than the number indicated by the author of the report.