China-based electric vehicle maker Nio (NYSE:NIO) has been reluctant to slash vehicle prices. However, as recent news suggests, the company is changing its stance. This is, at writing, helping to push NIO stock higher, albeit slightly.

But while the market is reacting favorably to this news, and although price war reluctance has been a big reason for my doubts in the growth resurgence narrative surrounding this stock, I’m not convinced that vehicle price cuts, alongside another major announcement, will do much to change the story with this fledgling vehicle electrification play.

There is still a risk that Nio’s vehicle delivery numbers and financial results will keep falling short of existing expectations. Issues with narrowing operating losses and reaching profitability are also likely to persist.

Put simply, there’s not yet any reason to go from bearish to bullish about this stock.

The Big Statement and NIO Stock

As Reuters reported early on June 12, Nio is finally following the lead of Tesla (NASDAQ:TSLA) and local rivals, with plans to implement its own series of vehicle price cuts. The EV maker plans to lower prices on all of its models, with discounts ranging between 6% and 9%.

In addition, the company is making another major move. One unique feature with Nio’s vehicles are their use of swappable EV batteries.

The company plans to win over customers with this battery-as-a-service business model. This strategy entails having drivers (instead of recharging their own batteries) taking their vehicles to vehicle swap stations.

Previously, Nio was offering this service free to new buyers, but with this announcement, will cease doing so.

As mentioned above, the market has reacted favorably to both developments. Rising by around 4.4% pre-market on June 12, further dissemination of this news around the globe could give shares a further boost.

However, while in theory slashing prices and suspending its free battery swap promotion could help boost revenue and improve margins, I contend that this news isn’t the game changer it may seem to be based on the headlines. Here’s why.

A Possible Reason Behind These Plans

Nio’s latest announcements come just days after the release of its latest quarterly earnings report. Investors had a roller-coaster of a reaction to the numbers, as seen from the performance of NIO stock on earnings day, June 9. At the open, shares initially spiked.

This was perhaps because the results themselves for the preceding quarter weren’t out of line with expectations. Yet shares retreated within an hour of the opening bell.

This may have been because market participants took a more in-depth look at the earnings release, which calls for deliveries of between 23,000 and 25,000 vehicles this quarter (ending June 30).

This forecast implies a fairly large jump in vehicle sales this month, but it still paints a murky picture about sales growth between now and the end of 2023.

This may explain why Nio has so quickly changed its tune about vehicle price cuts and the battery swap sales promotion.

By making these changes, management may attempt to bolster confidence that revenue growth will re-accelerate in a big way later this year. However, you may not want to necessarily jump to this conclusion.

Bottom Line: Don’t Assume The Story is Changing

The market may still determine the potential impact of lower vehicle prices and higher battery swap revenue on Nio’s performance going forward, but one sell-side analyst has already run the numbers.

That would be Citi’s Jeff Chung. His post-earnings research note on NIO incorporates the price cut news, and not in a bullish way.

Per the analyst, lowering vehicle prices will reduce margins, all while intense competition makes any price cut-related sales boost “potentially unsustainable.”

While Chung has lowered his “buy” rating on NIO, he has slashed his price target, from $13.40 to $11.50 per share. My view, of course, remains far more pessimistic.

At current prices, the market continues expecting a massive jump in sales growth later this year. Until stronger evidence backing the “resurgence narrative” emerges, NIO stock remains vulnerable to further price declines.

NIO stock earns a D rating in Portfolio Grader.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.