What happened

Shares of Chinese electric vehicle maker NIO (NYSE:NIO) were trading lower on Monday. There was no obvious news driving shares lower, but it may have been caught in a sell-off that affected other recently hot investments including Tesla and Bitcoin. 

As of 1:15 p.m. EST, NIO's American depositary shares were down about 5.5% from Friday's closing price.

So what

While there are good reasons to be bullish on NIO's long-term prospects, it's hard to argue with the notion that the stock has become expensive. After all, this is a company that sold just 43,000 vehicles in 2020 -- and it's still sporting a market cap nearly twice that of Ford Motor Company.

Investors who have been around The Motley Fool for a while know that some stocks that seem expensive now often look cheap in retrospect. That could turn out to be true of NIO. But I think it's very possible that today's downward movement is related to declines in Tesla, Bitcoin, and similar assets in the sense that lots of things are looking expensive -- and some investors may be responding by moving to reduce overall portfolio risk.

That might well include taking some NIO profits, and that could be why the stock is down today. 

Now what

There was some small news on NIO on Monday, but it wasn't bearish. China's Auto Home website reported that NIO is now in the last stages of testing its new second-generation battery-swap stations. The company expects to begin deploying the stations in April.

A NIO ES8, an upscale electric SUV, inside an automated battery-swap station.

NIO plans to begin rolling out new versions of its automated battery-swap stations in April. Image source: NIO.

NIO's roughly 200 battery-swap stations have become a key part of its overall business strategy. Buyers of new NIOs can choose to buy the vehicle without a battery pack, which lowers the purchase price, and opt for a subscription to the battery-swap service, which gives NIO ongoing revenue after the vehicle sale. 

The new second-generation stations can handle more vehicles per day than NIO's current stations, and can complete the swap operation in less time than the roughly three minutes required at the current stations. The company hopes to have 500 of the new stations up and running in China by the end of this year.

Auto investors can look forward to learning more about the new stations when NIO reports its fourth-quarter and full-year 2020 earnings after the U.S. markets close next Monday, March 1.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.