Chinese automaker NIO has confirmed they have formed a committee to investigate recent allegations that they used an affiliate battery maker to boost financial results.
The allegations came from a report by Grizzly Research LLC on June 28.
The report noted that sales to affiliate Wuhan Weineng Battery Asset Co helped inflate NIO’s net income by about 95 per cent and their revenue by 10 per cent.
In June, NIO responded, noting that the report was without merit and contained numerous errors and misleading conclusions. At the time, NIO confirmed they were reviewing the allegations and considering responses to protect its shareholders.
As part of that review, NIO is now forming a committee to review the allegation in more detail. The committee includes an international law firm and a forensic accounting firm.
In a statement, NIO said:
The company reiterates 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.
At least to say this will be something interesting to track. However, the market did not respond positively, with a 3.3 per cent stock fall in premarket trading on Monday.
Currently, the market is still not favourable, with an over 7.5 per cent drop in trading midday Monday.
You can read the full report from Grizzly on NIO below.NIO Final