What happened

Several items of note are pulling Nio (NIO -5.35%) shares in different directions today. Nio's American depositary shares initially dropped 3.8% Friday morning. They subsequently reversed course and were up as much as 3.4%. As of 2:13 p.m. ET, the stock was holding onto a 0.6% gain. 

So what

It actually makes sense that investors don't know what to think about Nio right now. After COVID-19-related lockdowns in several Chinese cities stymied production and sales in April and May, a recovery took hold in June. Nio, in fact, delivered more electric cars in June than in April and May combined. 

Nio wasn't the only Chinese automaker that experienced a recovery from the lockdowns. The China Passenger Car Association reported today that China's overall vehicle production rose 46% in June versus the prior-year period, as reported by The Wall Street Journal. And the Chinese government wants to make sure the recovery has staying power. 

On Thursday, the Chinese Ministry of Commerce issued a policy package to spur new vehicle sales by allowing used vehicle sales throughout the country. It additionally targeted electric vehicle (EV) demand, saying it was considering extending a tax credit for EVs that was set to expire after this year. 

But investors are also struggling with the potential for the recovery to stall from another wave of COVID infections. The country's daily COVID case count has surged from just a handful of cases to several hundred cases in the last few days, according to CNBC. 

Now what

Some of those cases are in Anhui Province, where Nio has its manufacturing factory. Investors are worried that this could lead to more short-term pain if lockdowns are imposed there. That helps explain today's early drop in the stock. 

But the longer term looks more promising for Nio if it and other EV makers continue to receive support from the government. The result is a mixed day for Nio shares, though investors seem to be more focused on that support and how it could help Nio continue to increase its growth rate.