Given Nio’s (NASDAQ:NIO) strong, recent growth, the low valuation of NIO stock and the high potential for its upcoming electric vehicles, I view its shares as a buy for value and growth-at-a-reasonable price (GARP) investors alike. Also likely to help the China-based automaker going forward are cost reductions spurred by its increasing utilization of robotics and Wall Street’s renewed respect for EVs.

Strong Growth and a Bargain Valuation

Last month, Nio’s deliveries soared 98% versus the same period a year earlier to 21,209. And in the second quarter, the automaker handed over 57,373 EVs, representing a huge 144% jump versus Q2 of 2023. Both the monthly and quarterly delivery figures set new, all-time records for the EV maker. Clearly, the company’s EVs have become significantly more popular in China recently as its growth is trending way above the 31% delivery increase that it managed to generate in 2023. According to Seeking Alpha columnist Yiannis Zourmpanos, Nio’s recent success is due to an increased focus on selling relatively affordable EVs.

After NIO stock plunged 49% in 2024, the shares’ valuation is quite low. Specifically, the name has a very low price-to-sales ratio of 1.15 times.

Upcoming EVs Have Great Potential

Nio’s upcoming Onvo L60 EV looks poised to take significant market share from Tesla’s (NASDAQ:TSLA) Model Y in China.

The Onvo L60, which is expected to hit the market in September, looks similar to the Model Y in pictures, and it offers similar driving ranges to Tesla’s iconic EV. However, the Onvo 360 starts at just $30,500 in China while the most affordable Model Y model has a sticker price of $34,600.

Also importantly, Nio intends to launch a large SUV in 2025 that will seat six or seven passengers. In general, there are not many large electric SUVs on the market. As a result, I believe that such EVs can easily generate a great deal of demand among consumers. Indeed, six months after Xpeng (NYSE:XPEV) launched its own large X9 SUV, the firm delivered an average of 2,200 of the vehicles each month. That represents about 20% of its total deliveries. Moreover, large SUVs tend to carry relatively high profit margins for automakers.

Deutsche Bank is very upbeat on the Onvo 360’s outlook, estimating that Nio can deliver 20,000 of the EVs per month. What’s more, the bank expects Nio’s deliveries to climb 62% in 2025. Coming on top of this year’s very strong growth, such an increase would be very good for NIO stock.

Cost Cutting and the Street’s Increased Bullishness

Nio is actively training humanoid robots and robot dogs to carry out inspections of its EVs. More importantly. the automaker is already utilizing 310 automated guided vehicle transport robots and 941 industrial robots in its assembly workshop. The automaker’s intense utilization of robots has likely greatly reduced its costs and probably significantly contributed to the year-over-year tripling of its gross margin to nearly 5% in Q1. As the company increases its use of robotics, its costs are likely to fall further over the medium-and-long term.

Also likely to boost NIO stock is Wall Street’s recently increased optimism about EVs. In general, I’ve found that the Street’s view of Chinese companies within a given sector is highly influenced by the same sector’s performance in America. For example, because many U.S. solar-power firms have struggled in recent years, large American investors have generally avoided Chinese solar stocks as well, even though Chinese solar companies have generally done relatively well during that period.

For the last year, the Street has been very bearish on EVs. However, that mindset has seemed to change after U.S. EV sales climbed 11% in Q2 versus the same period a year earlier. Indeed, NIO stock has advanced nearly 10% this month in the wake of the release of last quarter’s U.S. EV sales data.

The Bottom Line on Nio Stock

Given Nio’s lack of strong technological advantages over its peers, I don’t expect it to deliver tremendous growth over the long term. However, for value investors and GARP investors, it is worth buying at this point.

On the date of publication, Larry Ramer held a long position in XPEV. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.