Can NIO Overcome U.S.-China Tariff Headwinds?

Key Points

• New tariffs are hitting global stock markets, but NIO stock might be out of the crosshairs this time, creating an investment opportunity.
• Fundamentals will likely remain strong despite tariff negotiations between the United States and China.
• Analysts have reiterated over 100% upside amid the volatility.

China has been in the crosshairs of President Trump's most recent trade tariff announcements in the United States. These announcements have brought stock markets lower globally due to increased uncertainty and the fact that investors don’t know where the escalations or new developments may come from now. With this in mind, a sensible strategy will be obvious once the dust settles, but by then, it will already be too late.

Today, investors can get ahead of the curve by focusing on companies that fall outside the scope of the new tariffs—those operating entirely within the United States or domestically within China. Targeting these businesses can help reduce exposure to tariff-related risks, as they rely less on cross-border trade. That’s where today’s pick comes into play.

For the first time, not being as present in international markets may be a good thing for NIO Inc. NYSE: NIO, as the company is now 100% exposed to the Chinese economy and not to the imposed tariffs on goods coming in and out of the country. Staying away from the turmoil might also turn the attention of new buyers to this stock, realizing that, even though it is in China, it could be considered an unlikely safe haven today.

Indicators on NIO’s Future

Despite all the negative attention China has received during these trade tariff negotiations, there are some positive signs for NIO’s future. For example, the company’s short interest collapsed by up to 15.7% over the past month alone, a potential sign of bearish capitulation on this fundamental factor.

Moreover, the company’s smaller size could keep much of the so-called “smart money” from actively trading its stock. This is both a pro and a con for investors. While there’s less confirmation from institutional buying, it also means fewer risks of forced selling tied to momentum mandates or political tensions between China and the United States. As a result, retail investors hold a subtle—but powerful—advantage in this opportunity today.

That doesn’t mean institutional participants offer no guidance on this name. Wall Street analysts, including those at Citigroup, reiterated their Buy rating on NIO stock as of March 2025, maintaining a price target of up to $8.10.

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From today’s prices, this view would imply a net upside potential of up to 138%, making NIO stock a fantastic risk-to-reward ratio for investors looking for a high-probability “lottery ticket” while also escaping the short-term uncertainty of these new trade tariffs.

Fundamental Lead the Way in NIO

When it comes to the automotive sector, there is one major key performance indicator (KPI) that investors like to follow to determine a specific automaker's performance. That indicator is deliveries over a certain period, such as annual or quarterly.

In the case of NIO, the company’s investor relations website reportedly suggested net deliveries of 42,094 vehicles for the first quarter of 2025. Now, compared to the same quarter last year, this would imply a net jump of 40.1%, not something to be taken lightly in the face of all this economic uncertainty.

Of course, this jump in new deliveries translated to new benefits, such as a jump in revenue to $2.7 billion for the fourth quarter of 2024, implying a net growth rate of as much as 15.2% over the previous quarter and 5.5% from the previous year.

Another benefit of achieving higher volumes is economies of scale, which is a financial talk for saying that the company can now spread production costs across more sales. This translated to a vehicle margin of up to 12.3%, a welcomed improvement from last year’s 9.5% vehicle margin.

That being said, investors can expect these benefits to trickle down to earnings per share (EPS) eventually, as the company is still in its growth phase and has yet to reach full profitability. Even without net earnings, these growth rates and margin improvements can only make that event closer to the present than most think.

For these reasons, investors could ignore the fears about China tariffs and realize that this is a business right in the middle of a growth spur with no added exposure to tariffs, as its main consumer base and logistics map are within China.