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Is NIO Emerging as a Better Investment Option Than TSLA Stock?
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Key Takeaways
NIO deliveries jumped 25.6% last quarter and guidance points to up to 91,000 units in Q3.
NIO raised $1.16B to fund R&D, expand infrastructure, and strengthen its balance sheet.
Tesla posted its sharpest revenue drop in a decade in Q2 amid falling deliveries.
For years, Tesla (TSLA - Free Report) has been the face of the electric vehicle (EV) revolution. With a roughly $1.4 trillion market cap and ambitions stretching into AI, robotaxis and robotics, it’s still an industry giant. Yet the path ahead is less smooth than before. Rising competition, political shifts, and repeated delays have eroded Tesla’s dominance.
Meanwhile, NIO Inc. (NIO - Free Report) , often called the “Tesla of China,” is charting its own path. Its market cap is a fraction of Tesla’s at around $15 billion, and it remains unprofitable. But NIO is firmly rooted in China, the world’s biggest EV market, and is showing signs of fresh momentum.
Tesla is aiming to become a tech powerhouse. NIO, on the other hand, is doubling down on EVs in a supportive domestic market. Let’s weigh the strengths and risks of each to see which stock looks more compelling now.
The Case for NIO
NIO offers a broad lineup of sedans and SUVs, including the ES6, EC6, ET5, ET7 and ET9, alongside its new ES8 SUV. Beyond the flagship brand, its ONVO mass-market models like the L60 and L90 have gained traction, while its Firefly sub-brand adds volume at the lower end.
In the last quarter, deliveries rose 25.6% to 72,056 units, helped by ONVO demand. Management guided for 87,000–91,000 deliveries in the third quarter, up 41-47% year over year. The fourth quarter will see the first full quarter of ES8 and L90 sales, with NIO targeting 50,000 units each across NIO, ONVO and Firefly.
Margins are set to improve, with the L90 and ES8 designed for around 20% gross margin, backed by in-house innovation and cost control. NIO’s battery swap network is another differentiator. It has deployed more than 3,500 power swap stations worldwide, including 1,000+ on China’s highways, with over 84 million swaps completed. Additionally, NIO's lighter and more efficient battery packs reduce weight and cost while matching rivals' range, thereby boosting customer interest in its latest models.
Recently, NIO raised $1.16 billion via an equity offering to fund R&D, expand infrastructure and strengthen its balance sheet. While dilution is a concern, the move provides capital to support its long-term strategy.
The Case for TSLA
Tesla is facing challenges that even loyal fans can’t ignore. After its first-ever annual delivery decline in 2024, volumes kept sliding in 2025 — down 13% and 13.4% in the first and second quarters of 2025, respectively, on a year-over-year basis. A dated lineup, stronger rivals and weaker pricing power are all weighing on demand.
Financial results show the strain. The second quarter marked Tesla’s sharpest revenue drop in more than a decade, and margins are under pressure. Musk himself cautioned about “rough quarters ahead.”
Yet Tesla is expanding Model Y production at Giga Berlin despite European sales dropping for eight consecutive months. Competition from BYD and other Chinese EVs only intensifies the pressure. Policy changes are another blow. The phase-out of the $7,500 U.S. EV tax credit under the Trump administration erodes Tesla’s pricing advantage, while its once-lucrative regulatory credit stream is shrinking.
Having said that, investors appear to be becoming increasingly optimistic about Tesla due to the latest major developments. Early this month, Tesla’s board proposed a record $975 billion pay package for Musk, betting on his ability to drive the company into AI and robotics. Shortly after that, Musk also bought $1 billion in Tesla shares, signaling renewed commitment. Critics had argued earlier that Musk’s split focus hurt Tesla. But hasn’t much of that damage already been done?The reality remains that Tesla faces declining sales, fierce competition, and has ambitious projects — from robotaxis to AI — which could take years to meaningfully impact the business.
Price Performance & Estimates
Year to date, shares of NIO have jumped over 70%, handily outperforming Tesla’s 5% growth.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for TSLA’s 2025 EPS implies a 31% decline year over year but points to a 49% increase in 2026. The EPS estimates for the current year and the next year have been revised downward over the past 90 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NIO’s 2025 and 2026 bottom-line estimates implies a year-over-year improvement of 36% and 72%, respectively. Loss estimates for the current and the next year have been narrowed over the past 90 days.
Image Source: Zacks Investment Research
Conclusion
NIO is building momentum with a broader lineup, rising deliveries and its battery swap advantage, giving it a stronger growth runway in China’s EV market. Profitability remains a challenge, but recent capital raising provides resources to fund expansion and innovation. Its growth forecasts are more promising, with bottom-line estimates moving in the right direction in recent months.
Tesla, by contrast, is struggling with slowing sales, stiffer competition and policy headwinds, even as Musk pushes ambitious bets on AI, robotaxis and robotics that could take years to pay off. While Tesla’s long-term vision is bold, its near-term challenges are harder to ignore. While Musk’s confidence is unwavering, investors need clearer signs of execution before relying on just bold promises.
With a Zacks Rank #3 (Hold) for NIO versus a Zacks Rank #4 (Sell) for Tesla, NIO looks like the better-positioned stock for now.
Image: Bigstock
Is NIO Emerging as a Better Investment Option Than TSLA Stock?
Key Takeaways
For years, Tesla (TSLA - Free Report) has been the face of the electric vehicle (EV) revolution. With a roughly $1.4 trillion market cap and ambitions stretching into AI, robotaxis and robotics, it’s still an industry giant. Yet the path ahead is less smooth than before. Rising competition, political shifts, and repeated delays have eroded Tesla’s dominance.
Meanwhile, NIO Inc. (NIO - Free Report) , often called the “Tesla of China,” is charting its own path. Its market cap is a fraction of Tesla’s at around $15 billion, and it remains unprofitable. But NIO is firmly rooted in China, the world’s biggest EV market, and is showing signs of fresh momentum.
Tesla is aiming to become a tech powerhouse. NIO, on the other hand, is doubling down on EVs in a supportive domestic market. Let’s weigh the strengths and risks of each to see which stock looks more compelling now.
The Case for NIO
NIO offers a broad lineup of sedans and SUVs, including the ES6, EC6, ET5, ET7 and ET9, alongside its new ES8 SUV. Beyond the flagship brand, its ONVO mass-market models like the L60 and L90 have gained traction, while its Firefly sub-brand adds volume at the lower end.
In the last quarter, deliveries rose 25.6% to 72,056 units, helped by ONVO demand. Management guided for 87,000–91,000 deliveries in the third quarter, up 41-47% year over year. The fourth quarter will see the first full quarter of ES8 and L90 sales, with NIO targeting 50,000 units each across NIO, ONVO and Firefly.
Margins are set to improve, with the L90 and ES8 designed for around 20% gross margin, backed by in-house innovation and cost control. NIO’s battery swap network is another differentiator. It has deployed more than 3,500 power swap stations worldwide, including 1,000+ on China’s highways, with over 84 million swaps completed. Additionally, NIO's lighter and more efficient battery packs reduce weight and cost while matching rivals' range, thereby boosting customer interest in its latest models.
Recently, NIO raised $1.16 billion via an equity offering to fund R&D, expand infrastructure and strengthen its balance sheet. While dilution is a concern, the move provides capital to support its long-term strategy.
The Case for TSLA
Tesla is facing challenges that even loyal fans can’t ignore. After its first-ever annual delivery decline in 2024, volumes kept sliding in 2025 — down 13% and 13.4% in the first and second quarters of 2025, respectively, on a year-over-year basis. A dated lineup, stronger rivals and weaker pricing power are all weighing on demand.
Financial results show the strain. The second quarter marked Tesla’s sharpest revenue drop in more than a decade, and margins are under pressure. Musk himself cautioned about “rough quarters ahead.”
Yet Tesla is expanding Model Y production at Giga Berlin despite European sales dropping for eight consecutive months. Competition from BYD and other Chinese EVs only intensifies the pressure. Policy changes are another blow. The phase-out of the $7,500 U.S. EV tax credit under the Trump administration erodes Tesla’s pricing advantage, while its once-lucrative regulatory credit stream is shrinking.
Having said that, investors appear to be becoming increasingly optimistic about Tesla due to the latest major developments. Early this month, Tesla’s board proposed a record $975 billion pay package for Musk, betting on his ability to drive the company into AI and robotics. Shortly after that, Musk also bought $1 billion in Tesla shares, signaling renewed commitment. Critics had argued earlier that Musk’s split focus hurt Tesla. But hasn’t much of that damage already been done?The reality remains that Tesla faces declining sales, fierce competition, and has ambitious projects — from robotaxis to AI — which could take years to meaningfully impact the business.
Price Performance & Estimates
Year to date, shares of NIO have jumped over 70%, handily outperforming Tesla’s 5% growth.
The Zacks Consensus Estimate for TSLA’s 2025 EPS implies a 31% decline year over year but points to a 49% increase in 2026. The EPS estimates for the current year and the next year have been revised downward over the past 90 days.
The Zacks Consensus Estimate for NIO’s 2025 and 2026 bottom-line estimates implies a year-over-year improvement of 36% and 72%, respectively. Loss estimates for the current and the next year have been narrowed over the past 90 days.
Conclusion
NIO is building momentum with a broader lineup, rising deliveries and its battery swap advantage, giving it a stronger growth runway in China’s EV market. Profitability remains a challenge, but recent capital raising provides resources to fund expansion and innovation. Its growth forecasts are more promising, with bottom-line estimates moving in the right direction in recent months.
Tesla, by contrast, is struggling with slowing sales, stiffer competition and policy headwinds, even as Musk pushes ambitious bets on AI, robotaxis and robotics that could take years to pay off. While Tesla’s long-term vision is bold, its near-term challenges are harder to ignore. While Musk’s confidence is unwavering, investors need clearer signs of execution before relying on just bold promises.
With a Zacks Rank #3 (Hold) for NIO versus a Zacks Rank #4 (Sell) for Tesla, NIO looks like the better-positioned stock for now.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.