NIO-SW stock plummeted 5.73% in intraday trading on Tuesday, with the electric vehicle maker's shares taking a hit after BYD denied rumors about acquiring NIO or forming a joint venture with the company.

BYD's branding and public relations chief Li Yunfei refuted the circulating rumors, calling on netizens to stop spreading them. According to reports, the rumor claimed that BYD would purchase NIO for 16.5 billion yuan and set up a 51:49 joint venture called Bi Wei Lai Automotive, with NIO still operating independently.

The denial from BYD appears to have triggered a sell-off in NIO's shares, which dropped 6% during Tuesday's afternoon trading session in Hong Kong. As the electric vehicle industry in China faces increased competition, consolidation rumors have been surfacing, although BYD has firmly denied any such plans involving NIO.