Record-breaking sales of Nio's L90 model: Should investors consider purchasing NIO stock?
Nio's latest offering, the L90 SUV, is experiencing strong sales momentum, with over 10,000 units expected to be delivered in August 2025. This rapid sales pace positions the L90 among China's top-selling large SUVs, marking a significant improvement compared to Nio's previous models [1][3].
Priced competitively under $37,000, the L90 offers two purchase options: a full purchase model at $39,000 and a battery-as-a-service (BaaS) model at $27,000. The BaaS model, appealing to 70% of buyers, allows them to opt for lower upfront costs by renting the battery separately [1][2][3]. This subscription revenue stream is expected to contribute significantly to Nio's higher-margin service-based income.
Financially, Nio's revenue increased by 21.5% year over year in Q1 2025, and investors are optimistic that the L90’s success will sustain this growth trajectory and improve margins through strong vehicle deliveries and service revenues [1][2]. The production facility in Hefei is operating at full capacity, with overtime efforts to meet demand [1][2].
The L90's launch has triggered notable investor enthusiasm, with the stock surging 11% on announcement days and showing a roughly 15% gain year-to-date in 2025, despite a longer-term decline over the past three years. The stock remains undervalued relative to expected revenues compared to peers like Tesla, suggesting potential upside tied to L90 sales momentum and margin improvement [2].
However, Nio faces stiff competition from Chinese rivals Xpeng Motors and Li Auto, which have outperformed Nio in monthly deliveries and have higher margins [2]. To turn the tide, Nio needs to reach a higher plateau in terms of monthly deliveries while improving its margins for the stock to rise [3].
Reports suggest that Nio is aiming to deliver over 10,000 L90 SUVs in August [4]. The initial sales momentum remains uncertain, but analysts expect to see the margins that Nio expects to make on the L90 model [5]. The L90 is critical to Nio’s Q4 profitability goal and improving overall financial performance and investor sentiment [3].
Nio, once considered a promising Chinese electric vehicle (EV) startup company, often referred to as the "Tesla of China," has closed in the red for four consecutive years and trades at a fraction of its 2021 highs [6]. Among the 16 analysts covering Nio, two rate it as a "Strong Buy," two as a "Moderate Buy," eleven as a "hold," and one as a "Strong Sell" [7]. The Street-high target price for Nio is $8.10, which is 73% higher than the Aug. 7 closing price [7].
The L90 has made it into the top 3 in large SUVs in China based on insurance data just three days after launch [8]. The success of the L90 will be crucial for Nio's turnaround, with ongoing production and sales execution essential to realize expected margin improvements and positive stock performance.
The L90's success in sales and the subsequent increase in Nio's deliveries are expected to boost the company's revenue, particularly through the battery-as-a-service (BaaS) model's subscription revenue stream. This stream is anticipated to contribute significantly to Nio's higher-margin service-based income, following the launch of the L90 SUV in the competitive electric vehicle market.
The L90's strong sales momentum positions Nio to improve its financial performance and investor sentiment, with ongoing production and sales execution critical to realizing expected margin improvements and positive stock performance. The vehicle's contributions to Nio's Q4 profitability and overall financial turnaround remain of significant importance.
