What happened

Shares of Nio (NIO 0.38%) tumbled nearly 5.5% within minutes of the market's opening today before regaining ground. As of 1 p.m. ET Thursday, the electric vehicle (EV) stock had bounced back sharply and was in the green.

There was a lot more to the stock's fall today than just updates from China, but investors aren't shying away from betting on the EV stock at current prices.

So what

COVID-19 cases in China have surged to levels not seen since April, according to a Reuters report this morning. Guangzhou, one of China's largest manufacturing hubs, is even setting up big makeshift hospitals and quarantine facilities.

These developments have exacerbated investors' fears of yet another round of lockdowns hitting the manufacturing sector in China. Nio, for example, had to shut down its plants twice so far this year amid lockdowns.

Some analysts, however, are looking beyond China and have dug up other reasons to turn cautious about Nio stock.

This morning, Barclays analyst Jiong Shao cut Nio's price target to $18 per share from $19, citing cost concerns, according to The Fly. While applauding the company's execution in expanding its product portfolio and manufacturing capacity, the analyst expects "elevated expenses" to continue to hurt the business.

UBS analyst Paul Gong is even more bearish about Nio now, having slashed the EV stock's price target to $13 today from $32. The automaker is hugely banking on its recently launched premium midsize sedan, the ET5, for growth in the coming months. But Gong sees execution challenges and believes the market's expectations for the ET5 are already baked into the stock price.

Now what

There's no denying that Nio faces cost pressures, but that's more of an industrywide headwind. Battery costs have risen sharply this year and have hurt nearly every global automaker. As for other expenses, the company's spending on research and development, design, and new technologies could hurt its bottom line in the near term but should pay off in the long term.

Nio started delivering the ET5 only in September and is rapidly expanding production. It even expects to deliver a record number of vehicles in November and December, driven primarily by the new model.

Given that backdrop, it appears the analysts were compelled to slash their price targets on Nio stock just because it dropped to as low as $10 per share. The analysts' new price targets still represent significant upside despite all the challenges they see for the company.