What happened

Electric vehicle stock Nio (NIO 3.26%) rebounded sharply on Tuesday, surging 6.3% as of 12:15 p.m. ET. The broader market rebound, ever-rising demand for new energy vehicle (NEV) sales in China, the U.S. Environmental Protection Agency's (EPA) latest greenhouse gas emission standards that hugely favor EVs, and Nio's own growth plans are just some of the factors that sent the EV stock flying.

So what

Nio stock sank Monday morning as fears of rising omicron coronavirus variant cases gripped the market. Investors wanting to cash in on the EV boom seemed to have found multiple reasons to buy Nio shares today.

To start, sales of NEVs, which include battery-electric, plug-in hybrid, and fuel-cell electric vehicles, continue to rocket in China -- they jumped 122% year over year in the month of November. Between January and November, NEV sales grew 178% year over year to 2.51 million units. Nio is among the top EV manufacturers in China, also the world's largest EV market, and just wrapped up its annual day event where it outlined growth plans.

A person charging an electric car.

Image source: Getty Images.

On Dec. 18, Nio revealed it has opened reservations for a mid-size sedan ET5 and expects to start deliveries in September 2022. Nio will also start deliveries of its flagship ET7 sedan in March 2022. The company further plans to enter at least three new countries in Europe next year after having forayed into Norway this year.

Meanwhile, the EPA finalized its most ambitious greenhouse gas emission standards yet for electric vehicles on Dec. 20. Under the final standards, the EPA projects sales of EVs and plug-in hybrids to rise from 7% in model year 2023 to nearly 17% in model year 2026. President Joe Biden's recently passed infrastructure law earmarks $7.5 billion for EV charging networks, including building a network of 500,000 charging stations across the U.S. by 2030. More than $7 billion has also been set aside for spending on EV battery manufacturing, material, and recycling initiatives to help cut costs for EV manufacturers and boost their adoption.

All of this, of course, bodes well for EV stocks. Although Nio doesn't sell cars in the U.S. yet, the collective euphoria drove stocks across the sector higher Tuesday.

Now what

As a growth stock in a high-potential industry, Nio shares are bound to be volatile. Yet, these day-to-day gyrations in the stock are for traders and speculators to worry about, not investors who want a piece of the growing EV pie. Nio is firing on all cylinders, and the ET5 -- with its competitive price point -- could hugely boost Nio's foothold in its home market and help it catch up with Tesla. That's just one of the reasons why Nio is one of the best EV stocks to buy now and hold for big gains.