Nio Swapped 1 Million EV Batteries in a Week While Tesla Owners Waited 30 Minutes to Charge. Is NIO Stock a Buy?

Nio (NYSE: NIO), a major electric vehicle producer in China, differentiates itself from other EV makers through its swappable batteries. Its drivers can quickly swap out batteries at its battery-swapping stations as a faster alternative to conventional chargers. That process takes just three minutes, compared to Tesla's (NASDAQ: TSLA) average charging time of 30 minutes.

As of May 7, Nio operated 3,839 battery swap stations and 5,010 charging stations. It plans to build an additional 1,000 swap stations in 2026, and it aims to build a 10,000-station network over the long term. It has completed more than 100 million cumulative battery swaps and recently achieved over a million swaps in a single week during China's May Day travel rush. Those numbers are impressive, but do they make Nio's stock a worthwhile investment?

Image source: Nio.

Nio looks undervalued relative to its growth rates

Nio sells a wide range of electric sedans and SUVs. Its namesake brand sells higher-end vehicles, while its newer Onvo and Firefly sub-brands sell cheaper SUVs and compact cars, respectively. It sells most of its vehicles in China, but it's been expanding into Europe.

From 2020 to 2025, Nio's annual deliveries soared from 43,728 to 326,028 vehicles, its revenue grew at a 40% CAGR, from 16.3 billion yuan to 87.5 billion yuan ($12.9 billion), but its net loss widened from 5.6 billion yuan to 15.6 billion yuan ($2.3 billion). It also nearly went bankrupt in 2020 before a government-backed investor group bailed it out with a $1 billion investment.

That's why Nio is still a divisive stock. The bulls expect economies of scale to kick in as it ramps up production. Still, the bears believe its business model will become unsustainable as it faces intense pricing pressure in the crowded EV market and expands its capital-intensive battery-swapping network. The bears have been winning so far: its stock still hovers near its IPO price of $6.26 per ADR from 2018, and it trades at less than one times this year's sales.

Yet over the past year, Nio's vehicle deliveries accelerated, and its vehicle margins expanded. That growth was driven by its stronger sales of Nio sedans, Onvo SUVs, and Firefly cars in China, as well as its ongoing expansion into Europe. Its battery-swapping stations are also generating recurring, higher-margin subscription revenues. From 2025 to 2028, analysts expect its revenue to nearly double, with the company finally turning profitable in the final year.

We should take those rosy estimates with a grain of salt, but they imply Nio's stock could be a multibagger if the market revalues it as a high-growth EV play. By comparison, Tesla trades at 16 times this year's sales. Therefore, any good news could drive its stock a lot higher -- so it might be worth nibbling on right now if you expect it to prove the bears wrong.

Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.