For the average American, Nio (NYSE:NIO) may not resonate as a household name. Yet, market analysts and industry experts peg the automaker as China’s Tesla (NASDAQ:TSLA). Indeed, both companies carry an almost-mythical prestige among their proponents. However, both also have critical flaws. This makes NIO stock a rather tricky proposition.

On the positive front, you have the China factor. In a nation whose population is more than four times the size of the U.S., China enjoys inherent luxuries. Specific to Nio Inc, the world’s second-largest economy owns the largest automotive market. Over the last three years, the Chinese auto sector has veritably put the U.S. market in its rear-view mirrors.

That said, not everything about China benefits the NIO stock price. Indeed, the automaker’s home turf is also its liability. The most obvious concern is deteriorating U.S.-China relations. Should talks between the two sides not find common ground, the situation could escalate into a full-blown trade war. Although we’re likely to prevail in such an event, it’s not an ideal path.

The other major problem is the automotive sector. Needless to say, this has been an ugly year for automakers. General Motors (NYSE:GM) has shed 14% since the start of January. Rival Ford (NYSE:F) is in worse shape, losing 24%. And while drivers everywhere praise Toyota (NYSE:TM) for producing reliable cars, their equity has also dropped into double-digit losses.

The NIO stock price isn’t above the automotive volatility. Although shares are in positive territory against the initial public offering, the ride is nothing short of ludicrous. At its highest point, NIO hit $13.80. That means Nio Inc has lost half its market value over a two-month period.

Multiple Headwinds Might Derail NIO Stock

I can understand the urge to jump onboard. In its early stages, Tesla shares traded sideways for a few years before going bonkers in the spring of 2013. Speculators see the same potential for NIO stock, especially when you consider the longer-term outlook for the Chinese automotive market.

Not only that, Nio Inc has big ambitions. The carmaker routinely boasts about its smart-connectivity system, utilizing a plethora of optical and algorithmic devices to help improve and fine-tune the end-user experience. Management also loves talking about its in-car artificial intelligence (AI) assistant, proving that it can square up to its rivals in the consumer-technology department.

Nio, despite the glitzy marketing, remains a work-in-progress. For one thing, Nio-branded cars’ ride quality and functionality have significant room for improvement. That’s a nice way of saying that their vehicles are death traps.

Worse yet, Nio’s customers apparently share the same sentiment. While the automaker has churned out product, the sales rate hasn’t kept pace with expectations. In order to do so, the company must put up monster delivery figures in the fourth quarter. This could trouble NIO stock because the underlying organization isn’t exactly fiscally stable.

Another challenge for the Chinese Tesla is data-security concerns. While connectivity facilitates many conveniences, unscrupulous entities can also use it for nefarious purposes. This involves both questions on how Nio Inc will use the data they collect from its customers, and the likelihood for data hacks and breaches.

Along those same lines, management will face severe difficulties bringing their vehicles to other countries like the U.S. Americans are already suspicious about surveillance and privacy breaches. A Chinese company will rightfully endure more scrutiny, which is a net negative for NIO stock.

Nio Inc Will Need to Pay Its Dues

Many analysts believe that the ultimate trajectory of NIO stock will depend on management’s ability to ensure data security. Undoubtedly, that is a huge determining factor as to whether Nio Inc lives up to the hype.

But for me, the most-worrisome headwind is time. The automaker simply hasn’t put in the time to become a renowned brand outside of China. This could take a lot longer than investors may realize.

For example, American drivers today are familiar with Asian car manufacturers like Hyundai or Kia. But it took decades of trial and error and experimenting with customer incentives before these companies became household names.

It’s a similar tale with Japanese automakers. During their early years, Japanese cars were largely underpowered junk. But rising oil prices made smaller, efficient vehicles resoundingly popular, and companies like Toyota took advantage.

The point here is that almost every foreign carmaker has had to make a substantial time investment. While NIO stock might have the potential to be the next Tesla, I don’t know if I have the patience to see this through.

As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.