What happened

After falling consistently over the past few months, shares of Nio (NIO 7.50%) bounced back swiftly to gain a solid 28.7% in June, according to data provided by S&P Global Market Intelligence.

Was that a dead cat bounce, or has the electric vehicle (EV) stock finally bottomed?

So what

Investors' expectations for Nio were bleak ahead of its first-quarter report, which it delivered on June 9. Although demand for EVs in its home market of China continues to rise, the price war triggered by market leader Tesla (TSLA 0.89%) at a time when Nio was already struggling with deliveries left investors on edge.

Nio reported a 22.5% sequential drop in its deliveries and a 33.5% sequential drop in revenue for the first quarter. Its gross margin also contracted to only 1.5%, down from 3.9% in Q4 and 14.6% in the year-ago quarter.

The markets, however, still bid Nio stock higher after earnings for three reasons: The EV maker's deliveries and revenue improved year over year, its net loss narrowed by 18% sequentially, and management said it is focused on ramping up volumes of newly launched vehicles while optimizing costs. After the EV stock dropped by nearly 23% in the first five months of 2023, investors started to see value last month.

An unexpected move from Nio soon after its earnings release sent its shares even higher.

With Tesla cutting the prices of its EVs aggressively in recent months, several automakers joined the price war. Nio, however, had not been among them -- until last month, when it announced price cuts of 6% to 9% on all its EVs. Nio also said it will start charging for its previously free battery-swap service that allows car owners to swap depleted batteries for fully charged ones multiple times a month via its battery-as-a-service (BaaS) offering.

Now what

With Nio's price cut coinciding with the rapid roll-out of all its models on an advanced second-generation platform, its sales should get a lift. It started deliveries of its coupe SUV EC7 in April, launched the ES6 SUV in May, and started deliveries of the ES8 SUV and the much-awaited ET5 Touring sedan in June. And Nio is rolling out most of these models in Europe as well. It has also just secured funding of nearly $740 million in cash from an Abu Dhabi government fund.

During the Q1 earnings call in June, Nio CEO William Li said the company expects to deliver 10,000 EVs in July and hit 20,000 units a month later in the year.

With Nio's deliveries already having rebounded to 10,707 units in June from only 6,155 in May, we could very well have seen the bottoming for this EV stock.