Image source: Sam Robson, The Motley Fool UK
When thinking of volatile electric vehicle share prices, Tesla may immediately spring to mind. But NIO (NYSE: NIO) fits the mould too. So far in 2025, NIO stock has soared 61%. Still, that leaves it 89% below its peak back in 2021.
So, given the recent strong positive momentum combined with the low price compared to 2021, could it make sense for me to buy some NIO stock now for my portfolio?
Thinking about shares in the right way!
While the shares currently costs less than a tenth of the price in 2021, that is no indication of where the price may go from here. Just because a share used to sell for a particular price does not mean it will ever hit that price again.
Instead, when looking at possible shares to buy for my portfolio, the question I ask is whether the current price is attractive, given the company’s long-term commercial prospects.
NIO’s in growth mode
I certainly see a lot to like about NIO.
The electric vehicle market has been growing and I expect that to continue in years and indeed decades to come.
While, it may not be one of the top names, NIO is no minnow. Last month it sold over 1,000 vehicles a day on average. That was an all-time record and, at 64% higher than the prior September’s sales, shows that NIO is firmly in growth mode.
But this is not just a story about sales volumes.
NIO’s premium branding helps set it apart, while its launch of several new models over the summer could also extend its appeal. Indeed, that is part of the reason NIO stock has surged in recent months.
I also liked NIO’s battery-swapping technology and continue to think it is attractive. But as battery range grows over time, that may turn out to be less of a competitive advantage than once hoped.
Still, with strong sales growth, substantial and improving economies of scale, and a well-defined market positioning to appeal to customers, I think NIO could have a strong future.
Sales are in the fast lane, but not profits!
However, while NIO’s sales volumes make me sit up and pay attention, the profit picture appeals to me less.
So far, the company has been consistently loss-making. In its most recently reported quarter, the business reported a net loss of over half a billion pounds.
Is that a problem?
Perhaps not. NIO has used its rising stock price this year to raise more funds by selling shares, helping its liquidity. Longer term, car companies including Tesla have proven that years of heavy losses can give way to profits once economies of scale are sizeable enough and the business model is refined.
Keeping a close eye
Even if it does not break into profit soon, I think NIO stock could rise if sales keep growing at a fast clip.
If it can prove it is on the path to breaking even, or actually breaks even, I reckon the share may soar over time.
But that can be a difficult journey. For now, NIO continues to lose money hand over fist. That concerns me as a potential investor, as I like to see evidence a company is able to make profits.
So, for now, I am not investing – but watching closely!
