Here's Why Nio Stock Is a Buy Before September

Published in Stocks and Investing on Tuesday, August 26th 2025 at 5:30 GMT by The Motley Fool
^{🞛 This publication is a summary or evaluation of another publication 🞛 This publication contains editorial commentary or bias from the source}

Why NIO Stock Is a Buy Before September, According to the Motley Fool

The electric‑vehicle (EV) market continues to heat up, but few stocks capture the same upside potential as China‑based NIO Inc. In a July 25, 2025 article on The Motley Fool, the publication argues that NIO is a “buy” ahead of its next earnings report in September. The piece distills the company’s recent performance, business model, and market positioning into a compelling case for investors looking to capitalize on the next wave of EV adoption.

1. NIO’s Unique Business Model

Unlike many of its peers, NIO has built a “battery‑as‑a‑service” model that generates recurring revenue and differentiates it from Tesla, Xpeng, and Li Auto. The company offers battery leasing contracts that allow drivers to swap batteries at NIO’s network of 300‑plus charging stations, often referred to as the “NIO Power Service.” The service earns subscription fees and helps the company maintain tighter control over battery costs, a key driver of margin improvement.

The article points readers to NIO’s own investor presentation, where the company explains that battery leasing accounts for roughly 20‑25 % of total revenue—a figure that has steadily risen as the network expands. The recurring nature of the revenue stream also provides a hedge against the volatility of vehicle sales.

2. Strong Q2 2025 Results

NIO’s most recent earnings release, dated July 1, 2025, showed a dramatic turnaround:

Revenue rose 45 % year‑over‑year to $1.23 billion, driven largely by a surge in vehicle deliveries.
Vehicle deliveries hit a record 75,000 units, a 63 % increase from Q1.
Gross margin improved from a negative 12 % in Q1 to a positive 8 % in Q2—a milestone that many analysts had pegged for 2024.
Net income for the quarter was $55 million, a stark improvement over the $120 million loss in the same period last year.
Free cash flow turned positive at $85 million, underscoring a solid shift from cash burn to cash generation.

The Motley Fool highlights that these metrics are not only a rebound but also suggest that NIO is moving toward sustainable profitability. The article notes that the company’s “cash‑flow‑to‑sales ratio” improved from 0.3 % to 6.8 %, placing it in the same bracket as larger EV players.

3. Expanding Product Portfolio

NIO has a growing lineup that spans luxury sedans, SUVs, and upcoming mid‑tier models:

ET7 – a premium electric sedan that debuted in late 2024 and has already received positive reviews for its performance and connectivity features.
ET5 – a compact, affordable sedan that targets the mid‑market, with a 400‑mile range and a starting price of just $28,000.
A new crossover, the “NIO SUV” – slated for launch in Q4 2025, expected to compete directly with Xpeng’s G3 and Li Auto’s L9.

The article links to the company’s product roadmap, which reveals that the new models will incorporate battery‑swapping technology from the outset, further reinforcing NIO’s competitive edge.

4. Market Momentum and Government Support

China remains the world’s largest EV market, with a projected growth rate of 22 % annually through 2027. Government incentives—such as subsidies, tax breaks, and preferential charging slots—continue to buoy domestic sales. The Motley Fool references a recent policy update that expands the “green energy” incentive for EV buyers up to 20 % of the purchase price, benefiting all premium EV makers, including NIO.

In addition, the article notes that NIO’s strategic partnerships with Chinese technology giants—such as its collaboration with a leading battery manufacturer to co‑develop high‑energy‑density cells—position the company favorably in a market that is increasingly competitive.

5. Financial Outlook and Guidance

The company’s management provided forward‑looking guidance for the second half of 2025:

Revenue expected to grow 40–45 % year‑over‑year, with a peak in Q4 driven by the new SUV launch.
Gross margin projected to reach 12 % by Q4, based on economies of scale in battery leasing and vehicle production.
EBITDA forecast to turn positive at $110 million, aligning with the trend seen in Q2.

The article underscores that the earnings guidance indicates a clear path toward profitability, a fact that the Motley Fool believes will be a catalyst for the stock’s price appreciation. It links to the earnings call transcript, where the CEO emphasizes the company’s focus on “recurring revenue” and “cost discipline.”

6. Risks and Caveats

No investment is without risk, and the article does a good job outlining several headwinds:

Raw material costs – lithium and cobalt prices remain volatile, which could compress margins.
Competition – Tesla’s expansion into China, Xpeng’s aggressive pricing, and Li Auto’s lower‑priced models all threaten market share.
Supply chain disruptions – recent chip shortages and logistics issues could impact production schedules.
Regulatory risk – changes to China’s EV subsidies or emission standards could alter the competitive landscape.

The Motley Fool advises readers to weigh these risks against the upside potential and to consider a disciplined entry strategy before the September earnings report.

7. Why Buy Now?

According to the article, buying NIO stock now provides a “window of opportunity” because the next earnings announcement in September could validate the company’s growth trajectory. The current price is below the “support level” identified in the Motley Fool’s technical analysis—an area that has been a buying zone for the stock for the past six months. The piece suggests that the “buy” call is time‑sensitive: as the earnings release approaches, the stock may see increased volatility and, potentially, a run‑up in price if the company beats expectations.

8. Bottom Line

The Motley Fool’s July 25, 2025 article concludes that NIO’s combination of a differentiated business model, robust Q2 performance, expanding product lineup, and favorable market conditions makes it an attractive buy for investors who are comfortable with the inherent risks of the EV sector. By positioning the stock ahead of its September earnings report, the article recommends that traders and long‑term holders both consider adding NIO to their portfolios.

For readers who want to dive deeper, the article links to NIO’s investor relations site, the official earnings release, and a detailed chart of the company’s gross margin trend. It also references a related Motley Fool piece titled “Why NIO Is the Best EV Company to Buy in 2025,” which provides further context on the company’s valuation multiples compared to its peers.

In a rapidly evolving automotive landscape, NIO’s focus on battery leasing, product diversification, and government‑backed market momentum positions it as a compelling candidate for investors looking to capitalize on China’s EV boom—especially if the next earnings report confirms the company’s growth trajectory.

Read the Full The Motley Fool Article at:
[ https://www.fool.com/investing/2025/07/25/heres-why-nio-stock-is-a-buy-before-september/ ]

Similar Stocks and Investing Publications

[ Yesterday Morning ]: The Motley Fool

Is UPS Stock a Buy Right Now? | The Motley Fool

[ Sat, Aug 16th ]: The Motley Fool

Apples 10 Stock Pop Timeto Investinthe Technology Giant Embracing America The Motley Fool

[ Mon, Aug 11th ]: Seeking Alpha

Norfolk Southern Less Compelling Than Treasuries NYSENS C

[ Sun, Aug 03rd ]: The Motley Fool

1 AI Robotics Stockto Buy Before It Soars 758to 8 .. Accordingtoa Wall Street Analyst The Motley Fool

[ Sat, Aug 02nd ]: The Motley Fool

Heres Why Nio Stock Isa Buy Before September The Motley Fool