What every Nio Investor Should Know Before Buying

Chinese electric vehicle (EV) maker Nio (NYSE: NIO) has been a pretty terrible investment over the medium term. Share prices are down more than 85% over the last five years.

However, Nio's share price recently started showing signs of life. It's up 37% year to date:

But before you consider an investment in this speculative carmaker, there are some things you should know.

Know what it's selling

Nio has leaned hard into the popular SUV segment, but it's particularly unique among EV makers thanks to its popular battery-as-a-service (BaaS) feature, which was designed to bypass a major drawback to EV adoption: slow charging times.

If a Nio owner has a BaaS subscription, they can visit one of the company's battery swap stations to switch out their car's depleted battery array and replace it with a new array that's 100% charged. This generally takes far less time than even a supercharging station can offer. The company now offers fully automated battery swap stations, which it says allow a user to swap out their battery array in three minutes without leaving the car, which is actually much more convenient than filling up at a gas station.

Because BaaS is a service, Nio doesn't include the cost of the battery array (a substantial chunk of the cost of an EV) as part of the car's purchase price. This has allowed it to undercut rivals on price in its home market of China.

Image source: Getty Images.

Know why Nio's shares are up

Despite Nio's stock price woes, the company has been slowly but surely ramping up production over the past several years. In recent months, its sales growth has been nothing short of astonishing. August 2025 deliveries of 31,305 vehicles were up 55% from August 2024. September 2025 deliveries of 34,749 vehicles were up 64% over the prior year, and October's deliveries of 40,397 vehicles were up a jaw-dropping 92.6% year over year.

Nio's top models by October sales were all SUVs, including the third-generation ES8, which was introduced in September, and the ET5 Touring crossover SUV. However, the company's mid-range, family-focused sub-brand Onvo's L90 SUV has been the company's best seller, with more than 11,000 deliveries per month for the past three months. The company's affordable Firefly sub-brand's lone model, a subcompact hatchback, is also selling well.

Because the hottest sellers in the Chinese EV market right now are SUVs and affordable models, Nio is in the right place at the right time.

Know the risks with Nio

Even though Nio's vehicle deliveries and revenue have been increasing by leaps and bounds, so have its net losses. The company has yet to turn a profit, and its net losses have actually been getting larger each year for the past five years. However, in Q1 and Q2 2025, the company's losses shrank sequentially, and it's reportedly targeting its first-ever profitable quarter in Q4 this year.

However, achieving consistent profitability is easier said than done at an EV company (just ask Tesla), so Nio's stock should be regarded as highly risky and speculative. Investors shouldn't invest money in this stock that they can't afford to lose.

John Bromels has positions in Nio and Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.