The complaint, filed by Wolf Haldenstein Adler Freeman & Herz LLP, centers on claims that Microvast misled shareholders about the status of its Huzhou Phase 3.2 expansion and its ability to meet margin targets. According to the filing, inventory management issues and customer rollout delays were concealed, leaving investors with an inaccurate picture of the company's fiscal health.

Market skepticism surfaced on June 25, 2025, when Grizzly Research accused the firm of fabricating business capabilities and overstating production activity. The stock price volatility that followed intensified after the abrupt departure of Chief Financial Officer Charles Schultz in August 2025 and subsequent disclosures of production delays. By March 2026, the company reported a sharp decline in gross margins to 1% and revenue of $96.5 million, significantly missing consensus estimates. This final disclosure triggered a 34.2% single-day drop in share value.