I have always been bullish on electric vehicle stocks and I am a strong believer in the potential of the sector. The EV sector is no longer limited to China, it has expanded globally and there is a noticeable surge in the demand of EVs. One such company making the most of the EV boom is Nio (NYSE:NIO). Once NIO stock spiked high and looked overvalued to many but it has dipped lately and is trading at $31 today. 

As the revenue and sales continue to grow, NIO stock is perfectly positioned in the market. It has innovative ideas and it has replaced the traditional car showrooms with NIO houses where the whole family can consider purchasing one of the EVs. The recent dip in the stock is a great buying opportunity for long-term investors. NIO stock will go higher in the coming quarters and will generate profit for investors. Let’s take a look at the catalysts driving the stock. 

An Alternative Source of Income

Nio does not restrict itself to the sale of EVs, it has generated an alternative source of income that is significantly contributing to the revenue and net earnings. It offers a battery swap subscription service where car owners can join to enjoy quick battery swapping or to recharge the battery. The company allows buyers to invest in a plan that saves around $10,000 on the price of the car. In return, the car owners pay around $142 in a month to lease a 70 kWh pack and enjoy six-monthly swaps. The fully automatic swap only takes three minutes. Until March, the company had already completed 200,000 battery swaps.  

The other sales in Q1 2021 stood at $88 million which is a 395% rise from the same quarter previous year. It is also 23% from Q4 2020. As the sales of the company increase, there is a rise in the other sales because of a growing demand for the battery as a swap service. This will take NIO stock higher. 

It has signed an agreement with Ford (NYSE:F) to allow Mach-E owners to use the charging networks owned by NIO in China. NIO already announced its plans to expand the service in China as the EV market continues to grow. The company does not want to restrict itself to China and has plans in place to set up the business in Norway. It will begin by selling the EVs in Norway and will follow up by building four battery swap stations by the end of next year. 

Battery Swap Safety Standard

The Chinese government has recently announced the National Standard for Battery Swap Safety Requirement which will be implemented from Nov 1. The policy works in favor of those who are into domestic battery swapping. As per the standard, the models that have snap-on batteries should be able to support 5,000 battery swaps and models with bolt-on batteries need to support  at least 1,500 battery swaps. Nio is the only company that can deliver these vehicles on a large scale because its battery swap-enabled vehicles are already under production. 

Nio’s Power Swap 2.0 deployed this year has started operations in Beijing where it performs 312 swaps in a day, almost three times more than the current swap station. It aims to have 500 stations open nationwide by the end of 2021. 

The Bottom Line on NIO Stock

Priced at $31, NIO stock is not cheap but the shares are going upwards. They have shown high volatility in the past year and the company is making strong strides in the industry. This is an EV stock that you should hold forever. 

The company has positioned itself as an innovator in the crowded EV market. Besides the cars, its battery as a service model has served customers and generated high revenue for the company. Even if you think that there is competition in the EV industry, the battery as a service sets NIO stock apart from the competitors. 

For Nio stock, the only way is up. Do not be misled by the temporary dip in the stock, instead, take it as an opportunity to add it to your portfolio. 

On the date of publication, Vandita Jadeja 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.