Is Nio Stock a Buy Now?

Nio (NYSE: NIO) stock has surged over 75% this year as of Oct. 6, recently topping $7 per share for the first time in nearly 12 months. While that's a far cry from its all-time high of $66.99 in January 2021, it's a clear sign that investors are starting to take notice of the company's recent turnaround.

Buyers are embracing Nio's expanded lineup of new and refreshed electric vehicles (EVs). Still, Nio shares have plunged nearly 90% from their 2021 peak. With momentum starting to shift, is this a good time to start a position in Nio? Let's take a closer look at the Chinese EV maker.

Image source: Getty Images.

Nio is on a roll

Founded in 2014, Shanghai-based Nio produces electric vehicles under the Nio, Onvo, and Firefly brands. Nio has tried to create a sticky customer experience through its unique ecosystem, which is powered by in-house technology. Boasting more than 11,000 research and development (R&D) personnel, Nio designs its own batteries, motors, chips, and sensors, and the company says it's the first automaker to develop its own vehicle operating system. In 2023, Nio unveiled a smartphone that's designed to connect seamlessly with its EVs. Nio also operates an extensive network of battery charging and swapping stations throughout China, and even has a fleet of mobile charging trucks.

Nio initially focused on selling premium EVs. But over the past year and a half, the company has launched two new brands targeting mass-market buyers: Onvo and Firefly. Introduced in May 2024, the Onvo L60 is a family-friendly midsize crossover taking aim at the Tesla Model Y, the world's best-selling vehicle. Meanwhile, Motor Trend describes the Firefly hatchback as "a small, affordable, urban electric runabout" that is Nio's answer to the popular Mini Cooper. Firefly deliveries started in late April, and management said Nio delivered more than 10,000 Firefly EVs in its first three months.

The launch of Nio's new mass-market brands -- and the debut of its ET9 premium sedan -- helped power a 26% year-over-year increase in second-quarter EV deliveries. The momentum carried over to the third quarter. Q3 deliveries surged 41% to 87,000 vehicles, a quarterly record. Those numbers got a boost from the launch of the Onvo L90, with sales of the full-size SUV exceeding management's expectations.

In 2024, Nio delivered nearly 222,000 vehicles, which was a 39% year-over-year increase and a record high for the EV maker. With more than 201,000 vehicles sold through the first three quarters of 2025, Nio is on pace to easily surpass last year's delivery total. The September launch of the redesigned ES8 premium SUV should provide yet another catalyst as Nio looks to finish the year on a high note.

The wild card is supply. Currently, Nio can't make enough of its L90, ES8, L60, and Firefly models to meet demand. That's a good problem to have. In Nio's second-quarter earnings call, management acknowledged the bottlenecks and said the company is working with its suppliers to ramp up production capacity. If Nio can work through the supply constraints and meet its goal of delivering 150,000 vehicles per quarter in Q4, total deliveries in 2025 will crush last year's numbers.

Profitability is still elusive

While the steady stream of new product introductions and model refreshes has turbocharged sales, Nio is still trying to figure out how to turn a profit. In 2024, Nio's total revenue grew 18% to $9 billion. But the EV maker reported a net loss of nearly $3.1 billion, which was an 8% increase over the previous year's loss.

There have been some positive signs in 2025. Second-quarter gross profit increased 12% compared to the year-ago period and 106% compared to the first quarter. Gains in gross profit suggest that a company is making improvements in its operational efficiency, and that growth in revenue is outpacing growth in the cost of goods sold. Nio's Q2 net loss decreased slightly compared to the year-ago period and was down 26% compared to the previous quarter.

Management is tightening operational expenditures and leaning on its in-house tech to achieve economies of scale, with the goal of breaking even on a non-GAAP (adjusted) basis in the fourth quarter. But the road to net profitability on a generally accepted accounting principles basis won't be easy in Nio's home market of China, where its profit margin is under relentless pressure from brutal price wars. It's worth noting, though, that Nio has global ambitions, and recently expanded its European rollout.

Nio seems to have some momentum right now, with its strong product pipeline juicing sales and garnering positive reviews from industry publications. Wall Street has taken notice, and several analysts have hiked their price targets in recent weeks. Still, this is a stock that comes with some baggage. Nio has been unprofitable from the get-go, and it frequently issues shares to prop up its balance sheet. The latest capital raise was in September, when Nio sold 209 million Class A shares to fund its R&D efforts. Share dilution is an ongoing concern with this type of stock.

That said, if you have room for a speculative play in your portfolio, Nio isn't a bad choice. Just be mindful of the risks.

Josh Cable has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.