Nio said false information about it declaring bankruptcy suddenly appeared on the internet and was then widely spread in a malicious manner.

Nio (NYSE: NIO) has been hit with a new malicious rumor, as the information dissemination environment becomes more complex.

"Yesterday, we noticed that false information about 'Nio declaring bankruptcy' suddenly appeared on the internet and was subsequently widely spread maliciously," the Chinese electric vehicle (EV) maker's legal department said in a statement today.

These actions are suspected to be serious violations of the law, and Nio has reported to the police and will take other legal means to pursue the legal responsibility of those who planned, created and spread this rumor, the statement said.

"The internet is not a place beyond the law, and the development of the automotive industry requires healthy competition," Nio's statement read.

For such groundless, intellectually insulting and malicious behavior to defame Nio's reputation, the company will actively take legal action to safeguard its legitimate rights and interests and dignity of the law, it said.

In the Chinese communication environment, screenshots shared on social media and in instant messaging software are often prone to go viral, especially with negative messages, posing challenges to a company's operations.

In a screenshot seen by CnEVPost circulating in a WeChat group, a paragraph suspected to be written by an AI (artificial intelligence) claiming that Nio had declared bankruptcy and sparked much public reaction.

Such rumors are easy for those who know Nio to determine that it's false, but are likely to raise concerns among some about the company's prospects, which in turn could drag down vehicle sales.

Nio has previously had a high tolerance for false rumors and had not usually taken a hard line. Starting last year, the company began to take the threats seriously as the number of false rumors that could affect vehicle sales increased.

It opened social media accounts dedicated to its legal department on several Chinese social media platforms in May 2023, when false bad information about the new ES6 increased dramatically ahead of its launch.

Like its local counterparts, Nio is still losing money, though the company said this is largely due to R&D investments.

As of March 31 this year, Nio's cash and cash equivalents, restricted cash, short-term investments and long-term time deposits balances stood at RMB 45.3 billion ($6.4 billion), according to its first-quarter earnings report released in June.

It spent RMB 2.86 billion on research and development in the first quarter, the first time since the third quarter of 2022 that it has spent less than RMB 3 billion in a single quarter.

Nio will report its unaudited financial results for the second quarter of 2024 on Thursday, September 5, before the US markets open.

($1 = RMB 7.0908)

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