While most electric vehicle (EV) stocks had a rough start to 2024, Nio (NIO -5.71%) is among the worst-performing EV stocks of the year so far. Shares of the Chinese EV maker plunged 54.1% in the first half of 2024, according to data provided by S&P Global Market Intelligence.

Things haven't been easy for Nio, but the company is focused on its growth plans, and its deliveries are finally improving. So, could Nio stock rebound in the second half of 2024?

Headwinds hit Nio from all sides

Dwindling demand amid an intense price war in Nio's home market, China, at the beginning of 2024 forced several EV makers to slash their prices and offer big promotions to spur sales, which hit their bottom lines. Nio, a leading player in China's premium EV market, also took a hit.

Earlier in the year, Nio cut its first-quarter delivery guidance to 30,000 vehicles, down from 31,000 to 33,000 units. Some days prior, Nio reported deliveries of more than 50,000 units for its fourth quarter, but that was down 9.7% sequentially.

Deliveries were falling consistently for some quarters, and so were its margins. Nio reported a vehicle margin of 9.2% for the first quarter, down from 11.9% in the fourth quarter of 2023.

To add to the difficulties of a challenging market in China, the European Commission decided to impose added duties up to 38% on EVs from China. Europe is the only market beyond China that Nio is in presently, with the company recently opening its eighth showroom on the continent.

With Nio's sales and margins falling amid mounting challenges, investors dumped the EV stock through the first half of 2024. Its latest numbers, however, could signal a recovery ahead.

Should you buy Nio stock now?

Investors have overlooked one factor that hit Nio's deliveries in recent quarters: It began upgrading all its models last year, and that meant slower production. The upgrades were completed this year, and the company started deliveries of its last upgraded model, the ET7 sedan, in April.

I expected deliveries to pick up the pace once the upgrades were complete, and that seems to be what's happening now. Nio delivered 57,373 vehicles in the quarter that ended June 30, a significant improvement from its first quarter. Second-quarter deliveries, in fact, have surpassed management's estimates and were up a solid 144% year over year.

Meanwhile, Nio officially launched a mass-market subsidiary brand called Onvo in May and began pre-sales of its first model under that brand name, a midsize SUV called the L60. It will take on EV leader Tesla's Model Y but with a lower price.

With its overall volumes rising, promotional offers coming down, and the L60 expected to go on sale later this year, I expect Nio's margins to improve in the coming quarters. That could help the languishing EV stock rebound because I think the worst is already baked into the price.