With its shares down 10% year to date,  (NYSE: NIO) has had a tough go of it lately. Like many electric vehicle (EV) makers, it faces a challenging combination of rising rates, competition, and cash burn that puts its viability in question. Will the automaker be able to overcome these challenges in the next five years or continue underperforming the market? Let's dig deeper to find out. 

Nio is a China-based EV company that entered U.S. financial markets through an initial public offering (IPO) in 2018. But while its shares soared in the post-pandemic period, they are now down 86% from an all-time high of $63 in early 2021. To be fair, much of Nio's previously high stock price was likely due to overvaluation. The shares had a price-to-sales (P/S) multiple of around 34 at peak compared to the S 500 average of 2.4.

But fundamental factors are also at play. The company's second-quarter earnings highlight its perilous position. Vehicle sales fell 24.9% to $990.9 million, while vehicle margins collapsed from 16.7% to just 6.2%. Nio is reeling from rising competition as industry leaders like Tesla aggressively cut prices to offset slowing demand.

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Source Fool.com