Tesla stocks fluctuate a lot. However, in the long run it is a phenomenon. Over the last decade it has increased by approx 3097%. I have no plans to invest in Tesla, but should I consider buying shares of another electric vehicle maker, NIO (NYSE: NIO) while selling for a few dollars apiece?

Yes, the company is smaller than Tesla and is loss-making. However, ten years ago Tesla was also losing money – and much less than today.

Maybe NIO could achieve something similar?

A distinctive niche

As a company, I see that NIO has a lot to offer.

It is experiencing an augment in sales and is now a vast enterprise. Last year’s vehicle deliveries amounted to 326,000. meant a year-on-year volume augment of 47%.

For comparison, last year Tesla delivered 1.6 million vehicles. This actually meant a decline of 9% compared to the previous year.

This means that NIO’s sales volume last year was about 20% of Tesla’s sales volume (and quickly closed the gap), but NIO’s $11 billion market cap is less than 1% of Tesla’s $1.4 trillion market cap.

Sure, NIO isn’t in the business of generating and storing energy at the same level as Tesla, although its own experience with battery swapping could assist it pursue that path if it so chooses.

Compared to Tesla, it has been less vocal about its plans for autonomous taxis and robotics, although I think both companies could pursue this business over time.

I think NIO has done a better job than Tesla in some markets of developing an affluent clientele looking for fairly steep cars.

Given the downward pressure on electric vehicle profit margins in recent years, this could give the company some advantage over rivals.

Does the valuation make sense?

But comparing NIO to Tesla may not be helpful because I personally think Tesla’s valuation is too high to justify it.

One gigantic difference is that, as mentioned, NIO is still loss-making and still uses cash.

This isn’t some tiny difference, I think it has an impact on the fundamental investment case for the stock.

If I bought now, I would be counting on the automaker to make a profit at some point. But there is no guarantee that this will happen.

Strongly growing sales volumes have not yet translated into the economies of scale and resulting reduction in losses that I, as a potential investor, would hope to see.

I believe that NIO still has great potential that may not be fully reflected in the current share price. By purchasing one today, you could potentially compare yourself to purchasing a Tesla ten years ago.

For now, however, I am biding my time. NIO has yet to prove it has a viable business model. This may happen over time and the stock may soar.

However, I prefer to see demanding evidence of profitability before I consider putting a penny into the stock.