The litigation, filed in the U.S. District Court for the Southern District of Texas, centers on allegations that Microvast overstated its ability to hit gross margin targets and complete the Huzhou Phase 3.2 expansion by the end of 2025. According to the complaint, these representations kept share prices artificially high until a series of corrective disclosures triggered significant market volatility. The most notable impact occurred on March 17, 2026, when shares plummeted 34.2%—or $0.79—following a report of a $32.5 million inventory impairment and a gross margin of just 1.0% for the fourth quarter.

This decline was the culmination of a year marked by mounting skepticism. Earlier milestones in the alleged pattern of misinformation include a June 2025 short-seller report questioning the firm's partnership economics, the sudden departure of the CFO in August 2025, and subsequent delays in production timelines. Attorney Joseph E. Levi of Levi & Korsinsky LLP, the firm representing the class, argues that investors relied on the company’s public statements to value the stock, only to face losses when the reality of the firm's business capabilities surfaced. Shareholders who suffered losses during the class period are not required to testify in court, as the process typically involves submitting a claim form should a settlement be reached.