Should You Buy Nio When It’s Under $7? | Colorful fool

After briefly rising to a high of $7.89 a share in October, shares of the Chinese electric vehicle (EV) maker Nope (NIO 1.19%) it fell 13% and is now back below $7.

Today’s Change

(-1.19%$-0.08

Current price

$6.63

Key data points

Market capitalization

13 billion dollars

Daily range

$6.59 -$7:00 a.m

Range 52 weeks

$3.02 -$8.02

Volume

53 million

Avg. flight

79 million

Gross margin

10.28%

Dividend yield

ON

Once-bitten, twice-shy investors can look at Nio’s 2021 share price of $62.84 and see nothing but another failed EV stock. But Nio has been quietly ramping up production, introducing popular new designs and expanding its global footprint to the point that shares have now more than doubled from their recent five-year lows.

Can Nio regain some of its former glory (and better yet, its former market cap), or should investors still be wary?

More countries, more problems

Nio’s primary source of revenue is its domestic Chinese market, where sales have been growing in recent years. The company’s October deliveries totaled 40,397 cars, representing a 92.6% increase over the previous year. However, part of Nio’s growth thesis includes market expansion into Europe and other international markets, possibly including North America.

Since entering the Norwegian EV market in 2021, Nio has expanded its sales and service networks to four additional European markets: Sweden, Denmark, Germany and the Netherlands. It also sells vehicles in the United Arab Emirates, Israel and Azerbaijan. In June, the company announced plans to expand to seven more European countries. In August, it said it would introduce “right-hand drive” models of its vehicles to enter markets in Singapore while expanding into Uzbekistan and its first North American market, Costa Rica.

However, European demand has been declining in recent years. Based on vehicle registration data, estimated European sales of the Nio reach 2023 with approximately 2,365 vehicles sold. In 2024, that number dropped to 1,630, and it has fallen even further this year, with just 833 sales recorded to date.

CEO William Li appeared to confirm these figures during a recent visit to Norway. In response to a question about the differences between the Chinese and European software, Nio explained: “Validating a (autonomous driving) solution on 5,000 cars is as expensive as validating it on 800,000 cars,” apparently referring to the relative sizes of Nio’s European and Chinese fleets.

In addition to software issues, Chinese electric vehicles face European tariffs, which are particularly problematic for a carmaker like Nio that relies heavily on low-cost vehicles. Nio has plenty of time to reverse its decline in international sales – especially since it only recently launched its premium compact brand Firefly in Europe. However, the company clearly still has a lot of work to do to justify investors’ confidence in its global expansion plans.

All eyes on profitability

Despite steadily growing revenue — which has grown 300% over the past five years — Nio has never turned a profit. In fact, its new focus on making low-cost vehicles has widened its losses from a net loss of $1.6 billion in 2022 to a net loss of $3 billion in 2024. That makes sense: Selling cars at rock-bottom prices will erode profit margins quickly, so Nio’s best hope is that increased sales and economies of scale can compress margins.

While this may seem troubling, it is useful to remember Nio’s rival Tesla (TSLA 1.16%) he was on the same boat once. Tesla posted net losses in its first decade as a public company, becoming consistently profitable only after the launch of the popular Model Y in 2020. With a number of recent launches from its Firefly and Onvo sub-brands — including the best-selling Onvo L90 six-seat SUV — the Nio could follow a similar trajectory.

There are some signs that Nio is actually starting to turn things around. In 2025, its net losses gradually narrowed each quarter, while its quarterly margins gradually improved. The company is reportedly aiming to report its first profitable quarter in the fourth quarter of this year. Nio is expected to report third-quarter earnings later this month, and if its financials continue to improve, the current sub-$7 price tag could look like a bargain. However, if the company fails to make progress, the stock is likely to fall further.

All things considered, Nio stock is still risky, but priced accordingly. It’s probably a worthwhile bet for a risk-tolerant investor looking to acquire shares in a growth EV stock.