Few parts of the stock market have been more exciting lately than the electric-vehicle (EV) industry, as established automakers and new upstarts fight to take advantage of rising demand for sustainable transportation. NIO (NIO -5.42%) is one rising player in the industry, as the Chinese company is aiming to sell its vehicles into the biggest market of consumers on earth.

NIO's stock has risen fivefold just since early April, and shareholders have higher hopes than ever that the electric-vehicle company can do in China what Tesla (TSLA -3.01%) has done in the U.S. market. However, with the share price rising so quickly, NIO needs to show investors some signs that its fundamental business prospects can keep up. In particular, the following three things would show NIO shareholders that the company has the endurance to be a long-term player in the EV industry.

Blue NIO EC6 vehicle parked on a street next to a tree and a green building.

The EC6. Image source: NIO.

1. Vehicle delivery numbers need to rise markedly

The event that spurred the latest move higher in NIO shares was its release of second-quarter vehicle delivery volume figures. Investors were pleased to see an uptick in deliveries, especially given the pressures that the coronavirus pandemic had put on the economy. June deliveries amounted to more than 3,700 vehicles, up from just under 1,340 vehicles in June 2019. Overall, second-quarter deliveries of more than 10,300 compared quite favorably to 3,550 a year ago.

Yet this isn't the first time that NIO has sold between 3,000 and 4,000 vehicles in a month. In late 2018, NIO surpassed the 3,000 vehicle mark in both November and December. Monthly sales figures in the second half of 2019 were more consistent from month to month but still remained largely within a range of 2,000 to 3,000.

Contrast that with Tesla, which saw 50% growth in vehicle deliveries in 2019 and hopes to deliver 500,000 units this year. NIO has done well as a new company, but it needs to climb out of its recent range and really start building demand for its models.

2. NIO needs to invest its capital well

Many upstart companies fail because they don't have the capital to build out their businesses successfully. That's especially true in capital-intensive industries like manufacturing.

NIO doesn't have that problem, though, because it's had consistent financial support from both private and public sources. On the private-sector side, Chinese internet giant Tencent Holdings (TCEHY -2.72%) has repeatedly invested in NIO, boosting its stake in the automaker to 15% just last month. The public sector joined in through an economic development fund that will promote the company's relocation to the Anhui province.

Investors are breathing a sigh of relief that NIO has liquidity at a time when many companies are starved for cash. But that's not enough to justify big share-price gains. NIO also has to use that money wisely, with expansion plans that can demonstrate the company's ability to follow a strong strategic vision.

3. NIO needs new hit vehicles

NIO's first electric vehicle was an eight-passenger SUV, dubbed the ES8, that drew an impressive audience. Yet when the automaker followed up with its ES6 six-passenger SUV, it essentially cannibalized its own past success, as ES8 sales sank to a near-standstill, even as ES6 sales took their place.

NIO has plans to go in a slightly different direction with its next model. The EC6 will be a coupe model, although NIO is calling it a "coupe SUV." It will offer long-range driving capabilities of more than 380 miles and provide acceleration from 0 to 60 mph of around 4.7 seconds. That puts it in the same class as Tesla's Model Y, and NIO definitely wants to position itself as an alternative to its American competitor.

Tesla has been successful in part because it offers such a wide range of different vehicles. NIO needs to prove it can make the EC6 successful, and it then needs to show a longer-term strategy on how it intends to keep customers coming back for more.

Keep your eyes on the road

NIO has a huge opportunity to cash in on the lucrative Chinese EV market. If it can achieve these three goals, it'll have gone a long way toward showing shareholders that it has the staying power to go the distance with Tesla and other new companies in the auto industry.