Shares of Tesla’s rival Nio recovered early Thursday, a day after the Chinese electric vehicle company denied short selling sellers’ claims of rising revenue and margins that pushed its share price down. Hong Kong-listed Nio shares rose as much as 4.3%, well ahead of gains for the city’s Hang Seng benchmark of up to 0.4%. It improved on Wednesday, when the stock fell more than 11%, as investors reacted to the claims of the short-seller Grizzly Research. The research team said in a report that the Shanghai-based carmaker, through the Wuhan Weineng Battery Joint Venture, had boosted both revenue and profits by “flooding” Weineng with extra batteries. In response, Nio said the report was “unfounded and contains many errors, unsubstantiated assumptions and misleading conclusions and interpretations.” The company added that its activities have been duly supervised both by the listing process on the Hong Kong Stock Exchange and by the regular audit of its financial statements. Analysts at Citi, the US bank, said the market appeared to be “mainly concerned” about an apparent difference between users and the Weineng battery stock ratio. “We expect further clarity on this from Nio,” analysts said. Nio was founded in 2014 and survived a cash flow crisis in 2019 after securing a nearly $ 1 billion contribution from state-backed investors in early 2020. The company was selling its battery replacement technology to other groups to accelerate system absorption and expand the market as it seeks to gain a foothold in the fast-growing electric vehicle market.
