In recent weeks, investors have started to become charged up again about China-based electric vehicle company Nio (NYSE:NIO). Sentiment for NIO stock has shifted back to positive, resulting in a rapid move for shares back to double-digit prices.

Several recent developments have played a role in getting the stock back on an upward trajectory, but one of them stands out as the main reason behind this reversal.

That would be upbeat statements from Nio’s CFO, which suggest the company could report strong growth starting later this year.

However, before running out and buying the stock on these bold statements alone, it may be best to scrutinize the situation. Yes, there are some factors that support the “growth comeback” narrative. There’s a big factor that points to future disappointment instead of continued exuberance from now until the end of the year.

How NIO Stock Re-Entered the Fast Lane

Throughout January, February and early March, plenty of negative news weighed on Nio shares, including several consecutive underwhelming monthly deliveries reports and a disappointing quarterly earnings release.

Lately, though, the headlines regarding NIO stock have been of the positive variety. For instance, news of the company’s plans to launch a trial operation for planned high-speed EV battery swapping stations.

Yet what’s been the biggest bit of perceived positive news about Nio recently hasn’t been from a company announcement or news headline.

Rather, it has emerged from remarks made by Nio CFO Steven Feng in a March 21 interview with Bloomberg Television.

Feng stated that the company is “very confident” about hitting its 2023 sales target of 250,000 vehicles, more than double last year’s figure.

Again, there is substance to Feng’s bold statement. Feng cited the forthcoming release of new vehicle models along with the company’s battery swap and self-driving technology, as factors that could enable Nio to hit this goal. While the market agrees with this argument, I do not. Here’s why.

Unplugging the Bull Case

Given the factors mentioned by Nio’s CFO in his recent statements, plus other positives such as the end of China’s stringent Covid-19 restrictions, it’s easy to see why many are confident in the emerging bull case for NIO stock.

But while new vehicle models, improved technologies, and a more favorable economic environment all sound like the recipe for a growth renaissance, there’s a big negative that may counter all of them.

That would be intensifying competition in the EV space, against the backdrop of an expected slowdown in EV sales growth this year.

Tesla (NASDAQ:TSLA) hasn’t been the only EV maker slashing prices in China. Local Chinese automakers like BYD (OTCMKTS:BYDDF) Xpeng (NASDAQ:XPEV), and even Nio itself have also implemented price cuts.

This price war doesn’t necessarily mean sales growth for Nio will be nonexistent in 2023. However, it may limit the extent in which sales growth re-accelerates.

Lower vehicle prices also call into question whether Nio can reach breakeven status by next year.

This was another milestone that Feng hinted was a possibility for 2024. Margin concerns have cooled, but could again rise, additionally pressuring the stock.

The Takeaway

It’s up in the air whether Nio proves the skeptics wrong. Those holding bearish views on Nio could be proven right once again, as they were in 2022.

As you may recall, the company last year promised a late-year growth recovery. Although external factors prevented this from happening, Nio’s past of over-promising and under-delivering should make one skeptical.

That said, as I argued a few weeks back, it’s better to wait for further developments that bolster the bull case. A good example would be upcoming monthly deliveries data.

Another good example would be additional news regarding the variables that supposedly differentiate Nio’s vehicle offerings from the competition (namely, the swappable battery feature).

Until then, continue to wait-and-see with NIO stock.

On the date of publication, Thomas Niel did not hold (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.