NIO Inc. (NIO): A Bull Case Theory

We came across a bullish thesis on NIO Inc. on LongYield’s Substack. In this article, we will summarize the bulls’ thesis on NIO. NIO Inc.'s share was trading at $4.7700 as of January 29th.

NIO Inc. designs, develops, manufactures, and sells smart electric vehicles in China, Europe, and internationally. NIO has evolved into a multi-brand electric vehicle company targeting distinct market segments through its premium NIO brand, family-oriented ONVO SUVs, and compact high-end FIREFLY EVs. This three-tier strategy, launched in 2025 with vehicles like the ES8, L90, and FIREFLY, enables the company to serve diverse customers while protecting margins in premium segments. Anchored in China, NIO is also expanding overseas, with FIREFLY deliveries entering Europe and plans for broader international rollout.

Operationally, the company achieved record deliveries in Q3 and October 2025, with 87,071 vehicles in Q3 and 40,397 in October, driving a 40% YoY growth and marking its strongest delivery streak to date. Revenue rose 16.7% YoY to RMB 21.79 billion (US$3.06 billion), with vehicle gross margins improving to 14.7% and overall gross profit up 51% YoY, highlighting efficiency gains and a richer product mix. Cost control, R&D streamlining, and stable SG&A contributed to narrowing losses and positive operating cash flow, with liquidity strengthened to US$5.1 billion following a US$1.16 billion equity raise.

NIO’s distinctive battery swap network, spanning 3,600 stations globally, underpins customer loyalty and enables the BaaS model, while software and autonomous driving upgrades enhance competitiveness. The multi-brand portfolio mitigates risks from single-segment weakness but introduces operational complexity. Market challenges include intense competition from BYD, Tesla, Xpeng, and Li Auto, policy shifts, and economic cycles, particularly affecting mid-range ONVO models.

 Looking ahead, NIO expects 120,000–125,000 Q4 deliveries (~70% YoY growth) and aims for quarterly break-even, with long-term targets of 500k–600k annualized units. Strategic expansion, margin improvement, and technology leadership position NIO for accelerated growth, though execution and capital management remain crucial. With Q3 momentum, strengthened finances, and infrastructure scaling, NIO is at an inflection point—transitioning from high-growth, loss-making operations toward sustainable profitability and global market relevance.

Previously we covered a bullish thesis on NIO Inc. by 1Darkhaos in February 2025, which highlighted expansion into ONVO and FIREFLY, battery-swapping technology, and strong investor backing. The stock has appreciated approximately 1.05% since coverage as early optimism around scale and infrastructure plays out. The thesis still stands as NIO executes multi-brand growth. LongYield shares a similar perspective but emphasizes record deliveries, margin improvement, and Q4 break-even targets.

NIO Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 19 hedge fund portfolios held NIO at the end of the second quarter which was 21 in the previous quarter. While we acknowledge the risk and potential of NIO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NIO and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.