Nio (NYSE:NIO) stock deserves to be valued as it has been, and it may still be worth a buy.

The Chinese electric vehicle maker rolled 50,000 cars off the assembly line in July 2020, in the teeth of the pandemic.

In early April of this year, it passed the 100,000 mark, and sales are brisk as demand continues to rise, as does NIO stock.

As with many Chinese companies that don’t operate – for now – in the U.S., many people use metaphors to describe the Chinese firms. In NIO’s case, you may want to call it China’s Tesla (NASDAQ:TSLA).

That may be true to a certain extent, as many of these comparisons are, but China’s EV market is different. For example, the Chinese middle class is bigger than the entire population of the U.S.

That’s a pretty good initial market. Plus, all the political and economic tussling between the U.S. and China means buying local Chinese companies makes a lot more sense now than it did a few years ago.

Current supply chain issues are a perfect example of that logic.

NIO Stock Shows Potential

One of the clearest examples of the success of NIO stock  is its astronomical market cap for a company that hasn’t turned a profit. At a $58 billion market cap, that’s about $580,000 per vehicle. And that’s for its U.S.-listed shares.

Of course, that’s not a great comparison. Comparing it to companies with similar market caps, Nio is in the same league as Mexico’s leading mobile telecom America Movil (NYSE:AMX), video game maker Activision Blizzard (NASDAQ:ATVI), Regeneron Pharmaceuticals (NASDAQ:RGEN), and Thomson Reuters (NYSE:TRI).

Ford (NYSE:F) has a market cap of about $61 billion.

So, yes, it’s wildly valued, but NIO continues to grow its product line in China as well as in Europe.

Because European Union countries have a number of reciprocal deals with Chinese firms, those two markets continue to trade with one another. European cars are sold and manufactured in China and vice versa, not unlike the EU’s deal with the U.S.

This is part of the sky-high valuation. It’s a way for U.S. investors to diversify their “green” portfolios with an EV company that’s actually making and selling vehicles.

Dotcom vs EV Booms

I’m old enough to remember the dotcom boom (and bust). Brokers – remember them? – were literally telling clients that if a stock didn’t have a PE in the triple digits it wasn’t worth buying.

Near the top, they were telling their income investing clients that had been sitting in utilities and Old School blue chips that growth was the new income.

I’m not kidding.

That’s the kind of feeling I get about EV stocks right now. Most don’t even have earnings or a finished product but have billions in market cap.

This “been there, done that” side of me says it’s cold comfort that NIO stock actually has customers and three models rolling off its assembly lines.

The Rubber Hits the Road

As for NIO cars, it started with its ES-8, a high-range luxury 7-passenger SUV in 2018. It then rolled out its EC-6 luxury coupe in 2019 and its ES-6 high-range 5-passenger SUV in 2020.

The company is moving into lower price points although it does have an EV Formula 1 race car.

It also has its own charging units and has more than two dozen smart homes built using its technologies around China.

What’s more, NIO has adopted a battery swapping system. There are service centers around China that you drive into and they swap out your old battery for a new one in about 10-15 minutes.

That means when you’re on a long trip, you aren’t limited by mileage. You simply drop off your old battery and get a new one without waiting for a full charge.

NIO just swapped out its four millionth battery at the beginning of October. This was something TSLA thought about doing but decided against. It will be interesting to see if this ends up working better than the EV “filling station”.

All that said, NIO stock is still expensive. It isn’t a practical pick but more a “no guts, no glory” pick at this point.

On the date of publication, GS Early did not have (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.

GS Early has been an award-winning financial writer and editor for nearly three decades, working with many of the leading financial editors and publishers during that time. He’s seen a few things and hears more.