Baidu president named as a defendant in US lawsuit against EV maker Nio

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Baidu president of new business Zhang Yaqin has become embroiled in a class action lawsuit against Chinese electric vehicle manufacturer Nio after he served as a director at the company for three months last year.

Chinasoft International, where Zhang is a non-executive director, said in a disclosure to the Hong Kong Stock Exchange that Zhang had been named as a defendant in the suit against Nio. The legal action was filed in New York, with a similar suit being registered in California. Zhang served as a director at Nio between June and September 2018, according to Chinasoft.

Baidu was not immediately available when reached for comment.

The lawsuits against Nio allege that the company misrepresented itself in its IPO filing and violated US securities laws, resulting in losses for investors. Multiple law firms are currently involved in the New York and California suits, which were filed after Nio made public its fourth-quarter and full-year 2018 financials in early March. The law firms claim that a greater-than-expected slowdown in Nio deliveries let to a drastic decline in the company’s stock price, leading to losses for investors.

Other defendants include Nio CEO William Li, CFO Louis Hsieh, members of the company’s board, and IPO underwriters including Morgan Stanley, Goldman Sachs, and JP Morgan.

A Nio spokesperson told TechNode that the company believes the allegations are without merit and that it would defend itself vigorously.

Nio’s share price dropped by 50% in the three weeks following the release of its earnings. The company identified the lawsuits as a risk factor in its annual report to the Securities and Exchange Commission (SEC) on Apr. 2. Nio said that the company and certain members of its directors and officers had been named as defendants in the lawsuits.

In its financial results, Nio said it expected the slowdown to continue. The company projected that deliveries of its ES8 SUV would fall by more than 50% compared with the previous quarter.

According to a statement by Los Angeles-based Schall Law Firm, investors also incurred damages when Nio backed out of plans to build a production plant in Shanghai. The company initially planned to complete the plant by the end of 2020. Nio currently has a joint manufacturing agreement with state-owned vehicle manufacturer JAC Motors to build its vehicles in the eastern Chinese city of Hefei.