What happened

Shares of Chinese electric vehicle (EV) maker Nio (NIO 0.52%) have been under pressure for several reasons in recent weeks. Just since April 4, the stock has tumbled by more than 20%. That decline continued Wednesday, with Nio shares dropping 7.6% early in the session. As of 11:40 a.m. ET, the stock was down by 7.7%.

So what

The irony of Wednesday's move is it comes a day after legendary emerging-markets investor Mark Mobius told the South China Morning Post it may be time to jump into beaten-down Chinese names.

"Obviously, the Chinese government wants the market to perform better," the 85-year-old fund manager said. "We are probably reaching the bottom or near the bottom and the market is probably going to recover." 

Nio EV leaving battery swap station.

Image source: Nio.

Now what

Chinese stocks broadly have been dropping recently, first due to concerns related to Chinese regulators' vigorous crackdowns on tech companies, and more recently due to the imposition of lockdowns in major cities such as Shanghai to combat a new wave of COVID-19. Nio itself briefly suspended production at its Hefei facility due to a shortage of parts that it sources from suppliers located in regions directly affected by lockdowns. 

Mobius' comments were addressing the impact of the regulatory crackdowns, rather than the effects of lockdown-related disruptions, which should be more short term. He also said that investors looking for exposure to China should "buy individual stocks" rather than investing through its broad indexes. 

Several recent catalysts have been propelling Nio's business ahead.

Late last month, it began delivering its ET7 electric luxury sedan to customers. It also just announced the installation of its 900th battery-swap station in China. That technology gives people the option to purchase Nio's EVs for a lower initial price by buying them without batteries. Those customers then subscribe to its battery-swap program, which allows them to visit Nio's stations to exchange drained batteries for fully charged replacements, a process that only takes a few minutes. This increases convenience for EV owners, and brings in subscription revenue for Nio. 

Investors may still be more focused on the production situation, which has yet to be fully resolved. There could be more production impacts than some expect, as China's government has not lifted its lockdown orders, and has indicated it intends to keep pursuing its "zero COVID" policy for the rest of the year. But for long-term investors, it should feel good to know that a seasoned emerging-markets expert like Mobius is making bullish statements about Chinese stocks.