Is Nio Stock a Buy for 2025?

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I’m hesitant to answer this question after providing my analysis on NIO last year.  Which, while completely on point, also drew a lot of criticism from NIO bulls. 

I noted in that analysis that China’s EV dominance would not exist if it weren’t for the government pumping billions of dollars into its EV industry.  As a result, this has artificially inflated the value of most Chinese EV makers.  With NIO being one of them. 

In 2020, NIO almost ran out of cash, until a state-owned investment fund ponied up $1 billion to acquire 24% of the company.  That was then followed by the state-owned China Construction Bank that handed the company a $1.6 billion line of credit.

By the time I wrote about the stock in 2024, it was down more than 91% from its high of $62.  And I knew it would fall further because its revenue growth was still coming up short compared to its competitors.  Had it not been for a $2.2 billion investment from CYVN Holdings, I don’t think it would’ve had enough cash to get through another year.

Today, the stock trades for around $4.20 a share.  Or about 24% lower than when I first told readers to avoid it.

Of course, things have changed since I wrote that article, and the stock fell further.  So let’s re-evaluate the stock today.

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Is NIO Stock now a Buy?

Back in November, NIO’s Q3 earnings came in weaker than expected.  However, gross profit margins of nearly 11% were better than expected, and deliveries were up 12%.  So Q3 wasn’t a complete disaster.  And December deliveries came in solid, too, at 31,138 vehicles.  That’s a 73% year-over-year increase, and a new monthly record high.
But this may not be enough to move the needle.  Not as price wars continue to ramp up in the China automotive sector, and EU tariffs could gut NIO’s sales in that market. 

NIO maintains it will stay in the EU market, and even potentially set up manufacturing in the EU to avoid tariffs.  But the company would likely have to build a bigger presence there before committing to domestic manufacturing efforts.  Which is a bit of a Catch 22.

And the price war in China has become so cut throat, it’s hard to know which Chinese car maker will come out on top.  NIO doesn’t have the manufacturing muscle or cash as some of the bigger players, such as BYD, for instance.  BYD, by the way, recently asked suppliers to accept new price cuts as it plans further discounts for the China market.

NIO is small potatoes compared to the likes of BYD, which became the best-selling auto brand in China last year.  On a global scale, the company sold 4.3 million vehicles in 2024.  That’s a 41% increase over 2023 sales.  To put that in perspective, NIO sold less than 222,000. 

This isn’t to say NIO can’t continue to grow sales behind the backdrop of a major price war.  But it’s not going to be easy.  And I don’t believe NIO will be able to compete on price — which is really what matters at this point.

That being said, I still really like NIO’s battery swapping services.

I don't believe its battery swapping service would be of particular value in a place like the U.S.  But in densely populated regions of China, I get how it could work.  After all, it’s not like there are thousands of EV chargers in those massive apartment buildings.  And a $25 battery swap once a week is probably worthwhile for those who want to own EVs, but don’t have access to convenient charging.

As well, there’s a benefit in terms of battery warranties.  Given a battery swapping option, consumers will likely be less concerned about potential issues with battery failures.  A warranty wouldn’t even be necessary since the batteries get swapped on a regular basis.

I actually hope NIO does ultimately succeed.  But from an investment standpoint, I just don’t see much upside here.  I wouldn’t be opposed to trading the stock on a dip below $4.00.  But beyond that, there are just much better opportunities out there right now.  And with far less risk.