Chinese electric vehicle (EV) manufacturer NIO Inc. (NYSE: NIO) has had a turbulent ride in the stock market. Since its IPO in 2018, the stock has lost over half its value and currently trades at around $3.75 per share. For context, this is a sharp fall from its all-time high of $61 during the pandemic-driven tech stock boom of 2021—a staggering 93% drop from peak to trough.
Yet, despite the grim stock performance, NIO continues to grow its sales, expand its product lines, and aggressively target global markets. With the company’s current low valuation, some investors are wondering if buying NIO stock now could be like catching Tesla (NASDAQ: TSLA) in its early days.
NIO’s Growth Story and Expansion Plans
NIO’s core business focuses on producing smart, premium EVs. However, the company is now branching out into multiple segments with two new sub-brands:
- Onvo: Targeting the mainstream family car market with affordable EVs.
- Firefly: Catering to the high-end compact car segment.
This multi-brand strategy mirrors the approach of larger rival BYD, which has successfully launched vehicles across various price points. NIO aims to emulate BYD’s dominance by expanding its reach internationally in the coming years.
One of NIO’s standout innovations is its battery-swapping technology, which allows customers to replace depleted batteries with fully charged ones in just a few minutes. This concept eliminates the need for long charging stops, offering a major convenience advantage. The company already operates 3,245 swap stations and views this network as a key competitive edge.
In 2024, NIO posted strong sales growth, delivering 221,970 vehicles, marking a 38.7% increase from the previous year. Its annual revenue jumped 18.2% year-over-year to $9 billion. The vehicle margin also improved, rising from 9.5% in 2023 to 12.3% in 2024—a sign that the company is making strides toward profitability.
Looking ahead, management is targeting a doubling of vehicle sales in 2025, signaling confidence in its growth trajectory.
Risks and Challenges
Despite its strong sales growth, NIO remains deeply unprofitable. The company reported a $3 billion net loss in 2024, which was 8% higher than the previous year. This ongoing cash burn is a major red flag for investors, raising concerns about the company’s long-term financial sustainability.
Another risk is NIO’s aggressive diversification into non-core areas. In addition to running its EV business, the company has invested in building NIO Houses—premium showroom-community hubs with libraries, cafés, and event spaces. It has also launched a lifestyle brand (NIO Life) and even its own smartphone. While these ventures help build brand loyalty, they could spread resources too thin, detracting from the core business.
Further complicating NIO’s outlook is the rapid advancement in charging technology. Rival BYD recently unveiled ultra-fast charging tech that can deliver 250 miles of range in just five minutes. If this type of fast-charging technology becomes widespread, it could diminish the appeal of NIO’s battery-swapping stations, making them obsolete. This raises serious doubts about the viability of NIO’s costly swap network expansion.
Is NIO a Buy at $3?
For investors with a high risk tolerance, NIO’s current price may look attractive. The company’s expanding sales, growing vehicle margins, and push for global market share show potential. If its aggressive expansion and battery-swapping technology pay off, NIO could deliver significant returns from its current low price point.
However, the risks cannot be ignored. With mounting losses, intensifying competition, and technological challenges, NIO faces a tough road ahead. For now, it appears to be a speculative bet rather than a clear-cut opportunity like Tesla was in its early days.
Long-term investors should weigh the company’s innovative potential against its financial instability and competitive threats before deciding if NIO deserves a place in their portfolio.
