The NIO (NYSE: NIO) share price has fallen around 80% from its all-time high last year. That means some $40bn has been wiped off this emergent EV manufacturer's valuation. In fact, its recent record has cemented its position as one of the worst-performing stocks around.

However, NIO isn't the only EV brand to be having a hard time. The world's biggest car brand by market cap and EV-sector leader, Tesla, lost a quarter of its value in April. Tesla's well-publicized fall came as investors continue to move away from tech stocks coupled with news of disruption at Tesla's Shanghai plant, and founder Elon Musk's decision to sell some of his shares to fund taking Twitter private.

But the comparisons with Tesla shouldn't stop there. In 2021, Musk's EV firm reached a valuation of $1tn. Even today, after its considerable fall, it's still valued at $760bn. That's in stark contrast to NIO, which has a market cap of just $20bn at the time of writing. While NIO is yet to turn a profit, it has demonstrated impressive revenue growth and offers market-beating products. So where next for the NIO share price?
 

Growth prospects

NIO has shown impressive Tesla-Esque revenue growth in recent years, moving from $719m in revenue in 2018 to $5,686m in 2021. That's reflected in car sales which moved from 8,101 in 2018 to 91,429 in 2021. This is still some distance below Tesla, which delivered approximately 10 times more cars in 2022. However, if NIO can grow at 100% a year, then it won't be long before it reaches the numbers Tesla is achieving right now.

The capacity to sustain this growth is likely to be hammered this year amid Covid-19-induced lockdowns in China, notably in Shanghai. The resulting supply chain disruption caused NIO to halt the production of its vehicles earlier in April. This will undoubtedly have a knock-on effect on the annual production and annual revenue. While this should be a short-term issue, the Chinese government doesn't appear to have a plan to deal with Covid-19 in the long run. Evidence suggests that the zero-Covid policy is unlikely to be a long-term solution and numerous lockdowns will likely inhibit economic growth.
 

Valuation

NIO is not yet profitable, and the company doesn't anticipate making a profit until 2024. However, there are several metrics to suggest NIO is a good value for money right now. For one, the company has a price-to-sales (P/S) ratio of around 4. That's down from a P/S ratio of 20 in 2020. The metric is calculated by dividing the company's market capitalization by the revenue in the most recent year. By comparison, Tesla has a P/S ratio of around 13-14, which makes it look considerably more expensive than its Chinese counterpart. Obviously, there are reasons for this. Tesla looks like a less risky pick as NIO will undoubtedly feel some pain from Chinese lockdowns and has been threatened with delisting.

However, NIO's revenue growth in recent years has been no different from that of Tesla. The firm has released a new model on average every 18 months and that could enable further growth in the coming years. But based on revenue growth, NIO looks like a very attractive addition to my portfolio.
 

Risks

As mentioned already, there are some challenges ahead for NIO. The first issue is Chinese lockdowns. Lockdowns hurt manufacturers and negatively impact the supply chain. Investors will have to hope that these lockdowns are short-lived and that China finds another way of managing Covid-19.

Secondly, NIO may be delisted from the US exchange because it doesn't meet the specific account requirements for foreign stocks. The Shanghai-headquartered firm has been placed on the US Securities and Exchange Commission (SEC) list of companies that may be delisted. The news shocked the market and saw it sink 15%. Earlier this week, the EV company said its application to list its share on the Singapore Exchange had been approved. It also listed shares on the Hong Kong Stock Exchange in March of this year.
 

Future prospects

The EV market is growing considerably. But it's by no means guaranteed that every new EV firm will triumph. One reason I like NIO is its unique battery replacement system which allows car owners to swap batteries at NIO stations. This can be done in three minutes which makes it considerably quicker than conventional charging. NIO owners don't have to replace their batteries every time. The cars can still be charged in a conventional way. NIO has also introduced a scheme whereby people can purchase the car and lease the battery, reducing upfront costs for the customer. Customers can also choose to replace the battery with an improved version as the technology advances.

More generally, having watched endless car review videos, it looks like NIO has a very credible offering in the sector. It has an impressive portfolio of vehicles with market-leading ranges and eye-catching, although rather unnecessary (in my opinion), performance figures. The ET7 sedan has a range of 1,000km according to NIO and can do 0-100km in 3.8 seconds – not that anyone would need to. The ET7, along with other models, looks like the full package with attractive interiors and exteriors in addition to state-of-the-art driver aids. If it were available in the UK, I'd certainly consider it.
 

Where next for the NIO share price?

I think there's a lot of long-term potential here. NIO has shown impressive growth rates in recent years and while lockdowns may scupper progress, I'm expecting the brand to continue its upward trend. With the share price falling substantially over the past year, I think now looks like a great opportunity to buy. In fact, I've recently added NIO stock to my portfolio.