Nio (NIO +1.00%), a major producer of electric vehicles (EVs) in China, went public at $6.26 per ADR in 2018. It soared to a record high of $62.84 in early 2021, but it now trades at about $5.
Nio initially impressed the bulls with its soaring vehicle shipments, and the buying frenzy in meme stocks inflated its valuations. However, its valuations collapsed as its growth slowed down, it racked up steep losses, and the trade war between the U.S. and China intensified.
Will Nio's stock bounce back over the next 12 months? Let's review its business model, growth rates, near-term challenges, and valuations to make an informed decision.
Image source: Nio.
What sets Nio apart from its competitors?
Nio's namesake brand sells a wide range of electric sedans and SUVs. Its newer Onvo and Firefly sub-brands, which arrived in 2024, sell cheaper SUVs and compact cars, respectively.
Nio differentiates itself from its competitors with swappable batteries, which can be quickly replaced at its own battery swapping stations as a faster alternative to traditional chargers. Its drivers can pay for those swaps on an individual basis or subscribe to its recurring "battery as a service" (BaaS) subscriptions for cheaper rates. Its EVs also work with regular AC/DC chargers.
Nio now operates over 3,500 battery swap stations across China and Europe. That's up from just 777 stations at the end of 2021. It's been expanding its presence across Europe over the past few years to curb its dependence on China's saturated EV market.
NYSE: NIO
Key Data Points
How fast is Nio growing?
Nio's annual deliveries more than doubled in 2020 and 2021, but rose just 34% in 2022 and 31% in 2023. Its growth decelerated as it faced tougher macro and competitive challenges. Its vehicle margin also plummeted from a record high of 20.2% to 9.5% in 2023 as it grappled with inflation, supply chain constraints, and a pricing war across China's EV market.
Yet in 2024, Nio's deliveries increased 39% to 221,970 vehicles. Its stronger sales of higher-end ET-series sedans and Onvo mid-size SUVs in China, along with its rising shipments in Europe, drove that acceleration. Its vehicle margin expanded 280 basis points to 12.3% as economies of scale kicked in, its market share grew, and its pricing power improved.
In the first nine months of 2025, Nio's deliveries increased 35% year-over-year to 201,221 vehicles. Its vehicle margins dipped sequentially in the first quarter but expanded throughout the second and third quarters as it sold a higher mix of Nio's premium cars.
|
Metric |
Q3 2024 |
Q4 2024 |
Q1 2025 |
Q2 2025 |
Q3 2025 |
|---|---|---|---|---|---|
|
Deliveries |
61,855 |
72,689 |
42,094 |
72,056 |
87,071 |
|
Growth (YOY) |
11.6% |
45.2% |
40.1% |
25.6% |
40.8% |
|
Vehicle Margin |
13.1% |
13.1% |
10.2% |
10.3% |
14.7% |
Data source: Nio. YOY = Year-over-year.
For the fourth quarter, Nio expects to deliver 120,000 to 150,000 vehicles, representing 65.1% to 72% growth from the previous year. If it hits the midpoint of that forecast, its annual deliveries would rise 51% to 336,221. For 2025, analysts expect its revenue to increase 32% to 86.86 billion yuan ($12.45 billion), marking its strongest growth in three years.
Nio expects its newer, higher-margin vehicles -- including the full-size luxury crossover ES8 SUV and Onvo L90 SUV -- to drive its growth in the fourth quarter and throughout 2026. Over the long term, it aims to keep the vehicle margins for its premium models above 15%.
Where will Nio's stock be in a year?
Analysts expect Nio's sales to rise 45% in 2026 as the company ramps up shipments of the ES8 and L90 in China, expands the Firefly into more overseas markets, and refreshes its top-tier ET9 sedan.
Yet, in 2027, they expect its sales to grow only 15% as it laps those tailwinds and continues to face macroeconomic and competitive headwinds in China. On the bright side, it should narrow its net losses through 2027 as it streamlines its spending, finds fresh ways to monetize its battery-making division (through a potential spin-off or sale), and licenses its first-party automotive chipmaking technology to other companies.
With a market capitalization of 81.86 billion yuan ($11.73 billion), Nio trades at less than one times this year's sales. By comparison, Tesla (TSLA 2.97%) -- which is larger, more profitable, but growing at a slower rate -- trades at 14 times this year's sales.
Nio appears undervalued relative to its growth potential, and the trade tensions between the U.S. and China may be compressing its valuation. Therefore, Nio's stock could soar a lot higher if those tensions ease. Over the next year, I expect Nio's low valuations to limit its downside potential -- and rally on any positive news about China or the broader EV market.
