When it comes to electric vehicles, a lot of investors tend to focus on the likes of Tesla and BYD. But they are not the only game in town. Chinese electric vehicle maker NIO (NYSE: NIO) has also seen considerable commercial success in recent years. NIO stock is 47% higher now than it was a year ago – but still 90% below where it stood five years ago.

So, could now be the moment to add it to my portfolio?

Getting beneath the bonnet

Sometimes, a 90% fall in a share price can suggest that a share has moved firmly into bargain territory.

In other cases, though, it can indicate that a company’s valuation was once unjustifiably high and gravity has pushed it back to a more reasonable level.

I do think NIO stock was previously very overvalued. It has been consistently lossmaking, so in my opinion has not yet even proven that it has a viable business model.

Even now, it has a market capitalisation approaching the equivalent of £10bn. Given its unproven business model, it may still be overpriced.

Strong business momentum

If so, why is NIO’s stock price up by almost one half over the past year?

The answer as I see it is largely about the fact that NIO’s sales have been growing strongly.

Take last month as an example. The company delivered over 40,000 vehicles – in other words, well north of 1,000 per day on average.

For a monthly sales volume, that already strikes me as strong. It shows that NIO is building and expanding critical mass. An expanded range of models has helped.

But what is particularly noteworthy about the number as I see it is how it compares to the same month just one year previously. The year-on-year sales growth was 63%.

Perfect moment to buy – or not?

If NIO’s sales keep soaring, I reckon the stock price could move further up from its current level, at least in the short term.

With a premium brand, some proprietary technology like its battery swapping solution and a fast-growing installed user base, I see a lot of merit in the NIO investment case.

But I am not ready to buy now, even though I know that means I could potentially miss out on short-term gains in coming months if the firm’s car sales numbers remain strong.

The reason for my reluctance even to dip my toe in the water just yet is that I am a long-term investor. Ultimately, for NIO stock to command a high price and maintain it, I think the company will need to prove that it can make a profit.

So far it has not done that in any given year, let alone consistently. So I will not yet be investing in this company.

Should you invest £5,000 in Nio right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Nio made the list?

Christopher Ruane does not hold any positions in the companies mentioned.