Nio (NYSE:NIO) is looking to build a dealer network in Europe to augment its direct sales there. The news didn’t help NIO stock in pre-market trading, as it lost a little over 1% overnight.

The Chinese electric vehicle (EV) company sells through its own “Nio Houses” and has a company-owned set of battery-swap stations in China.

Nio opened this morning at about $8.40 per share, a market cap of around $15 billion on expected 2023 sales of $6.6 billion, with an expected loss of $2.8 billion.

Strength or Weakness

The question investors are asking today is whether the move toward dealers is a sign of Nio’s strength or weakness.

According to Reuters, which reported on the talks this morning, it’s a sign of weakness. Nio’s sales performance in Europe is described as “underwhelming” by the company’s president. The company has only six “Nio Houses” in Europe.

Nio may also need dealer support for “Firefly,” its first effort to tap the middle market for electric cars now dominated by BYD (OTCMKTS:BYDDF).

As China’s EV market has become saturated, the company’s car makers are increasingly turning to Europe for growth. Nio was the first to get in, but they’re at risk of being pushed out if they can’t grow faster.

Nio had total deliveries of 15,541 cars in September. This was up 43% from a year ago but is well behind the pace of competitors in the high-end of the market, like Li Auto (NASDAQ:LI).

When Nio launched in the last decade, it encouraged comparisons to Tesla (NASDAQ:TSLA). It had the backing of Tencent Holdings (OTCMKTS:TCEHY), it only sold direct, and it had a swashbuckling CEO in William Li (Li Bin in China), who actively sought out comparisons to Elon Musk. But Nio needed a government-directed bailout to get through the Covid-19 pandemic, which linked it closely to state-owned JAC Motors.

NIO Stock: What Happens Next?

I have long been skeptical of Nio. It dances to the beat of its own drum, and its uniqueness makes it a hard sell as a car and a company.

As of this writing, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.