Nio now faces “a dilemma between its brand positioning and profitability,” CMB International Global Markets Ltd. analysts wrote in a June note, which simultaneously downgraded the automaker to hold from buy. 

While it tries to cut costs, Nio is also facing the seemingly at-odds task of intensively pushing updated versions of its models into the market. Within the space of a month, Nio unveiled a revamped model of its top-selling ES6 sport utility vehicle and a new wagon variant of its ET5 electric sedan.

Extra versions may spur sales, but China’s new-energy vehicle market has now transitioned from over-crowed to somewhat more concentrated, with much bigger players like BYD Co. and Tesla consolidating their power.

One pillar of support for Nio in its infancy, and a large factor in helping the company survive the last time it found itself in dire straits, is its loyal fan base. Since its early days, Nio has cultivated an aura of clubbiness around its cars, building Nio Houses for customers and holding gala dinners and events where they can mingle and socialize.

But as its customer base has expanded, that feeling of belonging has diluted. Some customers have been a little miffed by Nio’s price cuts, believing they cheapen the brand.

Investors — and the people buying Nio’s cars — must hope the company has learned from its past travails. Yet Nio still has ambitious plans, like building 1,000 battery swap stations this year in China alone.

At an estimated cost of around $140,000 each, even with cash and cash equivalents of $5.5 billion as of March 31, that’s quickly looking like another outlay Nio can ill afford.