Nio Inc. (NIO) shares are feeling the pressure on Wednesday, the final trading day of 2025, after a strong run over the past week. It's the classic year-end move: rally hard on good news, then watch some of those gains evaporate as traders cash out before the calendar flips.

China Keeps the EV Subsidies Flowing

The rally that peaked Tuesday came courtesy of China's National Development and Reform Commission and Ministry of Finance, which confirmed that vehicle trade-in incentives will continue into 2026. That's big news for Chinese EV makers who've been nervously watching subsidy programs come and go. Under the extended framework, buyers who scrap older cars and purchase EVs can receive rebates worth low double-digit percentages of the purchase price, with slightly smaller support available for qualifying gasoline models.

Nio caught an additional tailwind from its European expansion efforts. The company's compact Firefly brand started deliveries in Austria and other EU markets, signaling that management is serious about diversifying beyond China's increasingly competitive home turf.

Profit-Taking Erases Tuesday's Gains

Wednesday's decline appears to be a textbook case of profit-taking rather than any fundamental shift in the story. With no fresh company-specific news to sustain momentum, some investors decided to bank their December gains before year-end. Others may be reacting to ongoing supply constraints Nio has flagged in recent updates, particularly around the ES8 SUV. Broader volatility in Chinese equities and year-end portfolio rebalancing likely didn't help matters either.

From a technical perspective, Nio found support around the $5 level in early December before staging its recent rally. The stock now appears headed back to test that same support zone. Despite Wednesday's dip, shares remain modestly higher year-to-date and are still up significantly over the past six months, reflecting renewed optimism that sustained policy support and overseas expansion can help the EV maker regain momentum in 2026.

According to market data, Nio carries a strong momentum score of 88.24, signaling robust longer-term price strength even as the stock experiences short and medium-term volatility.

Price Action: Nio shares were down 8.67% at $5.02 at the time of publication on Wednesday.

Traders will be watching closely to see if Nio can hold above the $5.00 threshold. If it does, that could create a base for a potential rebound in early 2026. But if selling pressure continues, the stock could test the lower bounds of its 52-week range, making the first few trading days of the new year particularly important for technical traders.