NIO Stock Reverses Course, Rises 6% in Two Days: What's Next?

NIO Inc. NIO stock has been on a wild ride lately. After sliding 17% last month — and falling nearly 9% in the first 13 trading sessions of April — this China-based electric vehicle (EV) maker seems to be showing signs of life. The stock has rallied 6.5% in the last two trading sessions, catching the attention of traders and long-term investors alike.

So, is this the beginning of a meaningful turnaround, or just a short-lived bounce in an otherwise downward trend? With NIO facing intense competition in China’s EV space and broader market volatility, the stock is now 94% off its all-time high. In fact, it is currently trading below its IPO price of $6.26. Let’s delve deeper into the company’s growth drivers and challenges to find out how to play NIO stock now.

NIO’s Q1 Deliveries & Product Lineup

In the first quarter of 2025, NIO delivered 42,094 units, up 40.1% year over year. The figure was within the guided range. Comparing the same with its closest peers— XPeng Inc. XPEV and Li Auto LI — the deliveries don’t seem that great.  During the quarter under discussion, XPeng delivered 94,008 smart EVs, which rose a whopping 331% from the corresponding quarter of the last year. Li Auto delivered 92,864 units in the first quarter of 2025, up 15.5% year over year. So, NIO has got some serious catching up to do.

NIO's vehicle lineup includes ES6, ET5T, ES8, EC6, ES7, ET5, ET7, EP9, EVE, ET9 and EC7 models. In late March 2025, the company commenced delivery of the NIO ET9. Besides the namesake brand, the company has two more brands— a mainstream mass-market brand, ONVO, and a high-end small car brand, Firefly. ONVO’s first product, L60, has been well received, and its second product, L90, is expected to begin deliveries in the third quarter of 2025. ONVO’s third product will be launched in the fourth quarter. Firefly’s first model is set to commence deliveries on April 29. The expanding vehicle lineup is expected to boost sales volumes.  NIO expects deliveries to double in 2025, fueled by new model launches and brand expansion.

Can NIO Break Even This Year?

NIO isn’t a profitable company yet. It incurred a net loss of more than $3 billion last year. However, the company expects its losses to narrow gradually this year amid sales growth and cost savings. NIO expects to break even in the fourth quarter of 2025.

Vehicle margin — a key metric for EV companies —came in at 12.3% in 2024, up from just 9.5% in 2023. However, NIO couldn’t meet its target of achieving 15% vehicle margins by the end of 2024.For 2025, the company expects a vehicle margin of 20% for the NIO brand and 15% for the ONVO brand. If NIO is able to deliver that, it will be a huge improvement. However, given the intense EV price war in China and NIO’s failure to hit the 2024 margin target, that remains a “big if.”

Also, NIO has been bearing the brunt of operational inefficiency. In the fourth quarter of 2024, SG&A expenses were up 22.8% on a year-over-year basis. The trend is expected to continue amid an increase in personnel costs and an increase in sales and marketing activities. High operating expenses are likely to weigh on margins, making NIO’s path to breakeven even more challenging.

The Zacks Consensus Estimate for NIO’s 2025 bottom line is pegged at a loss of $1.13 but implies an improvement from a loss of $1.51 incurred last year. Discouragingly, loss estimates have widened over the past 30 days.

NIO’s Battery Swap Edge

NIO’s battery swap technology is a major positive. It has deployed more than 3,200 power swap stations worldwide. Last month, NIO and CATL inked a deal to jointly build the world’s largest and most advanced battery swap network for passenger cars. NIO’s CEO William Li called this a "pivotal moment," underscoring the partnership’s significance in pushing battery swapping into a new phase of growth.

NIO’s Price Performance & Valuation

Over the past six months, shares of NIO have plunged 25%, wider than Li Auto’s 13.2% loss. Meanwhile, XPeng recorded an 82% jump, fueled by investor enthusiasm around its positioning as an AI-driven EV player. The company has gained attention for having some of the most advanced autonomous driving systems in China. Strong execution and solid reception of its new models have helped XPeng sharpen its focus on technologies like autonomous driving and robotics, reinforcing its long-term narrative.

6 Month Price Performance

NIO is currently trading at a forward sales multiple of 0.52, lower than Li Auto and XPeng.

NIO's P/S Ratio Vs. LI & XPEV

Buy, Hold or Sell NIO?

For long-term investors, NIO’s battery swap strategy and ambitious growth roadmap—including the launch of its ONVO and Firefly brands—offer a compelling case in the evolving EV landscape. These new offerings could help drive delivery volumes and strengthen NIO’s market presence.

For existing shareholders, holding onto the stock appears reasonable, given the company’s long-term potential. However, new investors may want to stay on the sidelines until there’s greater visibility on profitability. A lot hinges on whether NIO can deliver on its 2025 targets.

NIO stock carries a Zacks Rank #3 (Hold) currently.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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