Chinese electric vehicle (EV) manufacturer Nio (NIO) kicked off 2025 with a blend of modest delivery growth, rigorous cost optimization, and robust product expansion. Nio creates, manufactures, and sells premium smart electric vehicles and provides innovative battery and mobility solutions. It is frequently compared to the EV powerhouse Tesla (TSLA).

CEO William Li referred to 2025 as the company’s “hardest year for products,” with a busy launch schedule and a focus on achieving profitability through efficiency and scale. Despite a strong quarter, NIO stock is down 12.2% year to date, while the S&P 500 Index ($SPX) is up nearly 3%. Nonetheless, Wall Street believes this penny stock has significant upside.

Strong Product Pipeline Will Fuel Growth Ahead

Nio manufactures high-performance, intelligent electric vehicles for the mid- to high-end market. Its current product lineup includes the ET5 / ET5T (compact executive sedan and touring version), ET7 / ET9 (full-size and luxury sedans), ES6 / ES7 / ES8 (midsize to large SUVs), and others. In the first quarter, Nio delivered 42,094 smart EVs, a 4.1% year-over-year increase. This figure includes 27,313 units for the core Nio brand and 14,781 for its mass-market sub-brand, Onvo. 

While delivery growth was modest in Q1, total revenue was $1.7 billion, up 21.5% year-over-year, with $1.36 billion coming from vehicle sales, which increased 18%. Gross margin increased to 7.6% from 4.9% last year. According to management, the margin improvement was driven by lower material costs per vehicle, a greater contribution from high-margin services and R&D offerings, and lower losses from power solutions due to a larger user base. However, despite its growth, the company is still unprofitable. Adjusted net losses widened to $865.3 million in the quarter, up 28.1% from the same period last year.

One of Nio’s most notable achievements in the quarter was the implementation of the New World Model (NWM) smart driving system across its Banyan platform vehicles. This could establish the automaker as a leader in next-generation smart driving technologies. Management stated on the earnings call that combined deliveries of 946,000 units were reported for April and May, indicating a significant acceleration that sets a bullish tone for Q2. NIO expects Q2 deliveries of 147,000 units, representing a 25.5% to 30.7% year-over-year increase. Total revenue could rise by 11.8% to 15% in Q2. 

New models like the ES6, EC6, ET5, ET5T, ET9, and Anguo L90, a three-row flagship SUV, helped drive this growth. Furthermore, the Firefly, Nio’s compact EV brand, focused on affordability and safety, began deliveries in April and plans to expand internationally in Q3. Financially, the company is well-positioned to support new product development. At the end of the quarter, the company had $3.6 billion in cash, cash equivalents, restricted cash, short-term investments, and long-term time deposits. 

Despite the impact of seasonality on deliveries earlier this year, Nio is showing strong signs of growth, thanks to multiple new product launches and operational improvements. Nio expects Q3 to be a breakout quarter, with deliveries expected to increase significantly due to multiple new product launches, increased brand awareness for Anguo, Firefly’s global debut, lower supply chain costs, and optimized production. Management emphasized that if delivery growth continues to accelerate in Q2 and Q3, and margins improve as expected, Nio could be on track for a stronger financial turnaround in the second half of 2025. 

Analysts covering NIO expect revenue to increase by 36% in 2025, followed by another 31.3% in 2026. Losses are expected to reach $0.71 per share by 2026.

What Is Wall Street’s View on NIO Stock?

Following Q1 results, Citi analyst Jeff Chung maintained his bullish stance on the stock, citing the company’s promising path to profitability and operational improvements. Most notably, Chung forecasts a 55% increase in NIO’s share price, with a target of $5.90. According to Chung, the company hopes to break even by the fourth quarter of 2025, which would be a significant milestone if achieved. The rollout of refreshed models such as the new ET5, ET5T, ES6, and EC6 is expected to drive this margin recovery, as they offer not only improved performance and technology, but also cost efficiency. 

Similarly, Morgan Stanley reiterated its “Buy” rating on NIO, also setting a $5.90 price target, adding to the optimism that Nio is poised for a significant rebound as product momentum and cost discipline align.

However, Wall Street overall remains cautious, maintaining a “Hold” consensus. Out of the 16 analysts who cover NIO, two recommend it as a “Strong Buy,” three as a “Moderate Buy,” nine as a “Hold,” and two as a “Strong Sell.” The average price target of $4.42 indicates that the stock can rise by 16% from its current levels. The Street’s high target price of $8.10 implies a potential 112.6% gain over the next year. 

While Nio is making efforts, investors should weigh its technological promise and product pipeline against ongoing competitive pressures and margin uncertainty. As a penny stock that is still unprofitable, NIO remains a risky bet in the EV space.