The way shares of Nio (NIO 0.52%) were falling over the past week or so, today's rally may have come as a surprise to many. In the five trading days through yesterday alone, the electric vehicle (EV) stock had shed nearly 13% in value. This morning too, Nio opened in the red before bouncing back sharply.

Has Nio stock possibly bottomed out, and is today's rally a signal for you to buy the stock while you still can?

That depends a great deal on whether the factors that sent Nio shares tumbling in the first place still hold true.

The market dumped Nio stock when it found out earlier this week that Nio had suspended operations as it ran out of key parts after its suppliers were forced to shut operations to comply with the COVID-19 lockdown in China. The website CnEVPost also reported Nio as stating that customers should expect a delay in deliveries in the near future, and that the company also plans to increase prices of its vehicles and battery-as-a-service (BaaS) program starting May 10.

The development, of course, didn't sit well with the market as Nio had just reported record deliveries for the quarter ended March, which led many to believe the worst was over for Nio. Moreover, on March 25 at its fourth-quarter earnings conference call, Nio's CEO William Li confidently said the company is navigating supply challenges and has no plans to increase pricing right now.

So what has changed since?

To be fair, not much has changed. China continues to grapple with the pandemic, and there's little chance Nio will backtrack on its plans to increase prices given how prices of key raw materials like metals continue to rise.

Nio ET5 sedan parked in a wide indoor space.

Image source: Nio.

However, let's not forget that it's a dynamic situation, and Nio's production lines could be up and running in no time once the lockdowns ease. In fact, Nio hasn't suspended operations entirely unlike what the market believed. The company is still manufacturing vehicles on weekdays, according to Nomura analyst Martin Heung as reported on today.

Heung's report comes as a pleasant surprise and explains why Nio shares rallied today.

As for price hikes, Nio isn't the only one to raise prices; arch rival Tesla has increased EV prices multiple times in recent weeks to offset cost pressures.

In short, some of the factors that sent Nio shares tumbling lately appear to be nothing but near-term blips. Nio is expected to launch its SUV ES7 in late May, start deliveries of its second sedan ET5 in September, and is on track to start production at its new plant in Q3. Ark Invest founder Cathie Wood, who is a long-term investor, recently put her weight behind Nio and even applauded the company's vehicle designs today.

Sure, Nio stock could still be volatile, but I wouldn't be surprised if it sees more upside from here than downside.