Although , , and all reported positive delivery numbers over the past two days, and their price targets were raised by Goldman Sachs, their shares have been falling.

Nio closed down 10.23% on Tuesday and is down more than 9% to about $41 in Wednesday's pre-market session, Li Auto was down 3.14% on Tuesday and is down 5% before today's session, and Xpeng is down 10.89% yesterday and is down more than 5% before today's session.

All three companies have just released their November delivery numbers.

Upbeat delivery data

Nio delivered 5,291 vehicles in November, up by 109.3% year-on-year to set a new monthly record.

This is Nio's fourth consecutive month of record deliveries and the second consecutive month of over 5,000 deliveries since October.

Xpeng's November deliveries reached 4,224 units, up 342 percent year-over-year, the Chinese electric vehicle company said today.

From January to November 2020, a total of 21,341 units were delivered, up 87%

Xpeng P7 delivered 2,732 units in a single month, up 30 percent from a year earlier; 11,371 units have been delivered since the start of large-scale deliveries at the end of June this year.

Li ONE, the only model in Li Auto's lineup, delivered 4,646 units in November, setting another monthly delivery record, up 25.8 percent from October, the Chinese EV maker announced today.

Notably, the number of new orders for the Li ONE in November exceeded production for the month, the company said.

Goldman Sachs analyst Fei Fang on Tuesday raised the bank's price target on Li Auto to $60 from $20.60, maintaining a "Confident Buy" rating.

The bank also raised its rating on Nio to Neutral from Sell and raised its price target significantly to $59 from $7.70.

Goldman Sachs admitted to underestimating the impact of news on Nio's powertrain breakthrough, BaaS battery leasing services, and regulatory incentives.

New energy vehicle company being shorted

he already overextended valuation for the big three EV makers may be one of the reasons for the drop in stock prices. But that hardly explains the whole story.

Perhaps the most likely recent panic sell-off by investors was the short-selling of another unknown Chinese electric car company.

Kandi Technologies Group, an unknown Chinese new energy vehicle company also listed in the US, was shorted by short-sellers Hindenburg Research.

Hindenburg claims that Kandi falsified its revenue by making fraudulent sales to undisclosed affiliates. In short, Kandi used an affiliated shell company to pretend to be a customer, buy Kandi cars in large quantities, fake revenue through non-existent sales, and create a false sense of prosperity with high growth in order to stimulate a surge in the stock price and cash in on the opportunity.

Hindenburg also said they conducted site visits to Kandi's factories and customers in China, interviewed more than a dozen former employees and business partners, and reviewed numerous litigation documents and international public records, and found that nearly 64 percent of Kandi's sales in the past 12 months came from related parties.

The short sale report added that Kandi's largest customer, which accounted for approximately 55% of its sales in the past 12 months, shared a phone number and the same executives as a Kandi subsidiary, and was headquartered in a small building next to a Kandi factory.

Kandi's second-largest customer, accounting for about 9 percent of sales in the past 12 months, was once a wholly-owned subsidiary of the company, the report said.

Hindenburg noted that Kandi has been unable to account for the revenue it receives, a classic sign of phony income and that Kandi orchestrated a phony income scheme that was inflated to US investors in order to exploit regulatory gaps and extract cash from the US capital markets with impunity.

Kandi responds that the report contains numerous errors, misstatements of historical facts, inaccurate conclusions, and out-of-the-ordinary opinions.

Kandi takes any allegations of wrongdoing seriously and intends to address the key issues raised in the report, the company said, adding that it plans to study the report in-depth to identify key inaccuracies and is prepared to provide a detailed explanation in the near future.

Kandi's share price rose as much as 178% last month. After being short-sold, Kandi shares plunged more than 50% from their highs in just a few days. Among them, it fell 28.34% on Monday alone.

Nio, Xpeng, and Li Auto have different stories

Nio, Li Auto, and Xpeng continue to bleed due to the short-selling of Kandi.

However, unlike these three giants, Kandi is an unknown but legendary company whose main products are low-end products but targeting the US market.

During the first few years of the new energy vehicle boom, China's new energy vehicles were frequently exposed for "cheating on subsidies". According to Chinese media reports, Kandi's tactics were the same as those used by many Chinese new energy car companies a few years ago to cheat on subsidies.

Kandi was founded in 2002 and landed on the NASDAQ in 2007; in 2013, Geely and Kandi co-founded the Kandi Electric Vehicle Group, a joint venture of Geely and Kandi. Since then, Geely's electric vehicle business has also been under the Kandi name.

After gaining legal status, Kandi Electric quickly launched two models, which were included in the Chinese Ministry of Industry and Information Technology's new energy vehicle recommendations at the time. With a range of over 150 kilometers, they were eligible for an RMB 50,000 subsidy at the time.

As the favorable policy news continued to come in, Kand's production and sales rose as well.

In 2015, Kandi topped the Chinese market with 28,000 sales and became the 7th best-selling electric company in the world, jumping to second place in November 2015.

In 2016, four Chinese ministries, including the Ministry of Industry and Information Technology (MIIT) and the Ministry of Finance (MOF), jointly investigated four new energy vehicle companies for fraudulently obtaining subsidies, and Kandi was found to have done so.

After that, Geely issued a statement that Kandi was officially spun off to its parent company, Geely Holding Group, for 725 million yuan.

In 2018, Kandi sold only 6,964 EVs and will sell zero in 2019.

After experiencing setbacks in the Chinese market, Kandi tried to open up the American market.

In August, Kandi launched two new energy vehicles in the US, priced at $22,499 and $12,999, respectively, and deliveries officially began in the fourth quarter.

In addition to the launch of the new cars, Kandi made several other big announcements before it was shorted: it announced that its small electric car had received road permits and was priced at only $7,999 after subsidies; and on November 2, it announced that its subsidiary intended to go public on China's Nasdaq-style sci-tech innovation board, also known as the STAR market.

If Hindenburg's allegations are true, it would undoubtedly make Kandi the second company to go public in the US after Luckin Coffee that has committed financial fraud, thus dealing a new blow to investor confidence.