Last time I looked NIO (NYSE:NIO) shares have been on the rise, gaining more than 60% for the year. So I’m quite surprised to now see it back to $5, which means its year-over-year gain is a much more modest 17%.

Within five years, the share price dropped by as much as 89%!

However, the Chinese electric vehicle maker’s sales have accelerated in recent quarters, with three separate brands under its belt and narrowing losses. So, is now a good time to add NIO stock to my portfolio?

A forceful quarter

Despite operating in a tough Chinese market with fierce competition, NIO is growing rapidly. In the third quarter, it delivered 87,071 cars, an enhance of 40.8% year-on-year.

Its NIO, ONVO and Firefly brands continue to “to influence users in relevant market segments“. According to ONVO, the L90 remains the best-selling vast electric SUV for three months in a row in China. The L90 is a huge, three-row SUV packed with a host of advanced technologies.

Third-quarter revenue increased 16.7% to RMB21.8 billion ($3.1 billion), while vehicle gross margin increased from 13.1% to 14.7%, helping the company achieve its highest overall gross margin in three years (13.9%).

However, NIO reported an adjusted net loss of $384 million for the quarter. While this was a 38% improvement over the previous year, it is nonetheless significant. After more than a decade of existence, NIO still does not produce profitable cars.

Management believes profitability is just around the corner. But having followed this company for many years, I’ve heard this before. This age-old issue continues to act as a handbrake on the stock price, holding it back and dragging it down.

More concerns

Apart from the lack of profitability, I have three other concerns. The first concerns vehicle tariffs in the European Union (EU), which complicate NIO’s expansion in Europe.

WITH BYD and others that currently enjoy forceful EV sales in the EU, this is disappointing for shareholders.

On the other hand, the affordable, compact Firefly brand is now available in the Netherlands, Norway and Belgium. It is expected to appear in the UK in 2026. Therefore, Europe may still prove to be a very high growth market for the company. However, high tariffs make vehicles less price competitive than they otherwise would be.

Another potential problem is China phasing out tax breaks for electric vehicles starting in 2026. This could therefore potentially reduce sales in the company’s main market.

Finally, the global electric vehicle market is currently extremely competitive. but also Tesla and BYD, it is XPeng AND Li Caras well as dozens of legacy automakers electrifying their lineups.

My decision

If NIO does eventually start generating profits, I think a $5 share price would be a very prudent buy today. The price to sales ratio is only 1.1, which in theory is a very low result for a company recording revenue growth of over 30%.

However, given the constant losses and stiff competition, I am still not interested in investing. In my opinion, there are safer growth stocks that I can buy for my portfolio right now.