China’s wannabe “Tesla killer” is on a wild ride. Just seven months ago, Shanghai-based electric vehicle maker Nio\n \n (NIO) was seen as a cautionary tale. Its stock had cratered to less than $3 a share in New York trading, investors were calling the company a flop that put them off other startups, and it was bleeding cash. Since March, the stock has soared by more than 1,000% to $26.50. It gained more than 22% on Wednesday alone. And Wall Street analysts are again advising investors to buy into the company. So why the dramatic turnaround? Analysts at Citi, who nearly doubled their target price for the stock on Wednesday to $33.20, said that new factors had emerged to support their belief in the automaker’s growth, including “a very strong order backlog” racked up during China’s Golden Week holiday, recent market share gains, and its efforts to cut battery costs. Nio, which is backed by Chinese tech giants Tencent\n \n (TCEHY) and Baidu\n \n (BIDU), is often hyped as one of the fiercest homegrown competitors to Tesla\n \n (TSLA). Before it had even sold a single car, Nio focused heavily on creating a brand, selling millions of dollars’ worth of Nio hats and other merchandise online. It went on to set up services such as battery-swapping, mobile power vans and “Nio Houses,” showrooms that aim to double as clubhouses with a library, open kitchen and workshops for kids. An injection of 7 billion yuan ($1 billion) in April by state-backed investors in the Chinese city of Hefei, where Nio recently set up a new headquarters, was critical in restoring investor confidence, said Tu Le, founder of Beijing-based consulting firm Sino Auto Insights. An uptick in vehicle sales and upgrades to its technology, including a smarter autopilot feature, also helped put the company on a steadier footing, he added. Le described the investment as a “bailout,” a characterization Nio disputes. “[Hefei was] not going to let Nio fail,” he said. “[Now] they don’t have that pressure of, ‘Where’s my next paycheck coming from?’” It’s not just Nio that’s on a tear. Investor appetite for the electric vehicle sector has soared in recent months, partly led by enthusiasm for Tesla\n \n (TSLA) and confidence in China’s recovery, Le noted. Elon Musk’s automaker has made important inroads in China, starting production at its Shanghai Gigafactory in 2019 and beginning deliveries of its first locally made Model 3 cars to the public earlier this year. “I feel that Tesla kind of lifted all boats,” Le said, pointing to the recent rally in shares of other Chinese carmakers, such as Xpeng Motors. But he said Nio’s rally may have been overdone, as “there haven’t been that many wins to point to that level of valuation.” (Nio is now worth more than $36 billion.) “Some of it is, there’s just not a lot of good news in other sectors, so a lot of money is coming into EVs,” Le added.