What happened

Investors in Nio (NIO 0.38%) are finally getting a breather, as the electric vehicle (EV) stock began the week on a solid note after plunging nearly 9% last week.

As of 12:30 p.m. ET Monday, Nio was trading up 7.3% after having surged 10.8% earlier in the day on rumors about its much-awaited flagship luxury sedan,the ET7, touted to compete with Tesla (TSLA 1.50%).

So what

The China-based EV company has three models: the ES8 and ES6, which are SUVs, and the EC6 coupe. It plans to launch three new models in 2022, including the ET7.

Earlier this month, Nio dropped a bomb when it reported a sharp decline in deliveries for October, down 27.5% year over year, even as rivals continued to race ahead. The company said the drop was due to lower production caused by restructuring and upgrades of assembly lines and preparation to introduce new products. Management later revealed that the new products included the ET7.

A person analyzing rising stock price charts on a smartphone with a stock price display board in the background.

Image source: Getty Images.

This morning, CnEVPost, a news portal focused on the new-energy vehicle industry in China, reported Nio's ET7 product manager as saying reservations for the sedan are expected to start in mid-January, with deliveries in early 2022. It also cited the Chinese automotive website xchuxing.com as stating initial deliveries of a few hundred units ET7 are planned per month.

In another report from CnEVPost, Nio is also looking to offer ET7 versions with solid-state batteries and may have already finalized a local supplier that is China's third-largest power-cell supplier, which already has Volkswagen as a customer.

CnEVPost also reported Nio to be aggressively expanding its network of battery-swap stations in China to reach 700 by the end of the year. The battery-as-a-service (BaaS) program offers customers the option to buy cars without batteries (saving up to $10,000) and instead subscribe to plans that allow them to charge and swap batteries as needed at battery swap stations.

Now what

It appears Nio is on track to start selling the ET7 in 2022 and launch two other vehicles. With the completion of a secondary offering of $2 billion on Nov. 19, the EV maker is well funded right now to invest in new products and capacity.

Just this morning, Elon Musk hinted Tesla's flagship sedan, the Model S Plaid, could be available in China around March 2022. That could mean stiffer competition for Nio, but Tesla faces its own set of challenges in taking the Model S to China, including significant costs from having to import the vehicle from the U.S. In between, Nio has an excellent opportunity by launching the ET7 equipped with high-end features, including an advanced autonomous driving system and extra-long range.