Can NIO Stage a Comeback? Battery Swap Bet vs Reality Check

NIO was once hailed as China’s answer to Tesla. Three years ago, that might’ve been a legitimate comparison—the company was gaining traction with its sleek EVs and, more importantly, its innovative removable battery tech. Drivers could swap depleted batteries for fully charged ones in minutes instead of waiting hours at a charger. Game-changing? On paper, yes. In practice? The numbers tell a different story.

The stock has cratered 90% over three years. YTD it’s down another 57%, currently trading at $3.61—near the bottom of its 52-week range ($3.61–$15.20). Gross margin sits at just 4.9%, and the company burned $747.1 million in operating losses last quarter. Yet management is oddly upbeat: Q2 2024 delivery guidance projects 129.6–138.1% YoY growth to 54,000–56,000 units, with revenue climbing 89.1–95.3% to $2.3–2.4 billion.

Here’s the catch. China’s EV market is brutal. Price wars are relentless, international tariffs are tightening, and NIO’s cash runway—while at $6.3 billion—is burning faster than competitors’. Q1 revenue hit $1.37 billion, down 42% QoQ and 7.2% YoY, despite the gross profit jump. Vehicle deliveries fell 39.9% from Q4.

The battery-swap subscription model is genuinely differentiated. But differentiation doesn’t equal profitability. Wall Street is cautiously optimistic—the average price target sits at $6.52 (67.6% upside), with DBS analyst Rachel Miu backing a Buy at $7.10. The stock trades at 0.9x P/S, roughly in line with Chinese EV peers.

Bottom line: NIO’s technology is solid, but execution in a hyper-competitive market remains uncertain. The Q2 delivery surge could be a catalyst, but investors should wait for evidence of sustained profitability before loading up. This is a turnaround play, not a sure thing.