Here’s what Audi’s lawsuit against NIO says, and whether the suit will hold any merit and favor Audi in a trademark battle.
Audi sues NIO over alleged trademark infringement
Audi has filed a lawsuit against NIO over trademark infringement on two vehicle model names, according to German newspaper Handelsblatt. The lawsuit regards Audi’s models S6 and S8, which the manufacturer suspects may have inspired two of NIO’s EV model names, ES6 and ES8. Due to the similarity of the names, Audi says NIO is infringing on Audi’s trademark rights.
Will Audi’s lawsuit against NIO hold water?
NIO (NIO) is a known U.S. stock market presence thanks to its New York Stock Exchange listing. However, the company mainly sells its EVs in China (though it does plan to launch in Audi’s home base of Germany this year). While Audi is a global name that’s popular in Germany, the U.K., the U.S., and beyond, it also relies heavily on the Chinese market. In fact, China is Audi’s largest market in the world. Knowing this, it makes sense that Audi would file a trademark infringement lawsuit against NIO for its similar name.
Also, Audi has a seven-car lineup of fully electric models as of early 2022. Many of the models are inspired by their gas-powered counterparts, with the letter “e” at the beginning or end of the model name to clarify that it’s an EV. Naturally, if Audi ever wanted to electrify the S6 or S8, it’s plausible that they would want to use the name that NIO has already taken.
If the lawsuit goes in Audi’s favor, it could protect the company from a marginal amount of competition. Still, NIO will remain a force that Audi must compete against in China. It’s possible the lawsuit will be dropped or the companies will settle on their own negotiated terms.
NIO stock feels the heat from the Audi lawsuit, but it likely won’t last.
NIO stock is down nearly 7 percent from the market close on June 15 as of mid-day on Thursday, June 16. Still, the stock has recovered by nearly a third over the last month, slimming its YTD losses down to about 44 percent.
A lot of movement around NIO stock has to do with its recent product launches, including the ES7 SUV (a name that the lawsuit doesn't target). Large inflows naturally resulted in some outflow, and the Audi lawsuit may only be speeding up the latter.
Meanwhile, Audi is dealing with recalls for certain models, including some recent S6 models that reportedly have inaccurate fuel level reading.
Ultimately, Audi’s lawsuit is a stretch and could be the result of it seeking a competitive advantage in China. That isn't to say lawmakers won’t bite, but it could spark the era of Audi with serious skin in the global EV game.