Electric Automaker NIO Must Face Investor Suit on Manufacturing

NIO Inc. investors may pursue a suit accusing the company of misleading them about its manufacturing capabilities and government permits after a federal judge in New York found the allegations sufficient to move to the next stage.

Investors properly alleged the electric vehicle developer materially misled them about the progress of construction on a new manufacturing facility in Shanghai, did so recklessly, and ultimately caused their losses when its share price dropped, the U.S. District Court for the Eastern District of New York said.

The investors brought claims under the Securities Act—for alleged misrepresentations in the registration statement NIO ...