Electric vehicle (EV) stocks saw deep drawdowns in 2022 as investors in growth stocks dumped their shares in fear. Their pessimism wasn't unfounded -- the EV industry faced more challenges than ever in 2022, ranging from a shortage of key parts and supplies to sky-high global inflation, rising interest rates, the COVID-19 pandemic, and a raging war among other things. EV stocks crumbled as companies were forced to rethink their production and growth plans.

Yet, none of it takes away from the monstrous growth potential of the EV industry. That also means investors in equities who aren't taking advantage of such dips to buy promising beaten-down EV stocks are missing out on a rare opportunity to invest in a megatrend.

While many believe Tesla (TSLA 1.11%) is the go-to stock to bet on EVs, CEO Elon Musk's antics aren't helping the company and could be a lingering problem. Instead, I'd pay attention to a company that's a prominent player in one of Tesla's largest markets, and whose CEO is focused on taking the company to new heights. That's Nio (NIO 3.55%), and it's one of the most compelling beaten-down EV stocks to buy now and hold. Here's why.

Nio wants to catch up with Tesla

Nio is one of the largest players in China's premium EV market. In November, Nio's share in the EV market priced above 400,000 renminbi (RMB) hit 77.6%, according to CnEvPost.

Tesla may still be a much larger EV player overall in China, but Nio has a strong foothold in the premium market, and most of its recent moves and plans are aimed at beating out its arch-rival in the years to come. One example is ET5, a mid-size premium sedan that Nio started delivering recently. It rivals Tesla's Model 3, and Nio even expects ET5 sales volumes to surpass that of the hot-seller gasoline BMW 3 Series within a year.

Nio also plans to launch a Tesla Model Y rival in 2023, and it's just one of the five new products the company has lined up for the year. By June 2023, Nio expects to have a total of eight models on sale.

Nio ET5 sedan.

Image source: Nio.

At this pace, Nio could have something for everyone interested in EVs in the coming years. In fact, Nio is already targeting the mass EV market in China and wants to expand internationally (it has already entered Europe), all while vertically integrating the company. It is these plans that make Nio stock so attractive right now.

Nio's plans are impressive

Some of Nio's biggest plans for the coming years include a mass-market brand and manufacturing batteries and semiconductor chips in-house.

Nio is already working on a mass-market model that's expected to be priced between 200,000 and 300,000 RMB -- or roughly $28,700 to $43,000 --and should be ready for deliveries in China by the second half of 2024, followed by Europe. Importantly, the new product is expected to run on Nio's batteries.

In-house batteries could cut costs significantly for Nio and boost its gross margins. At a recent event  held in November, Nio's CEO William Li confirmed the company's plans to produce batteries and chips, and even said the company must manufacture these to reach 20% gross margins in the mass market. In the long run, Nio wants 70% of its battery requirements to be fulfilled in-house.

That's huge, as batteries account for almost 40% of EV costs and have been in short supply in 2022. The same goes for semiconductor chips, which were in acute shortage for a couple of years and thwarted the automotive industry's growth. Self-reliance on these key car parts, therefore, could prove to be a huge competitive advantage for Nio.

Of course, Nio will need a lot of money to achieve all of this. For now, the company has enough cash, its revenues are zooming, and Li expects Nio to break even soon.

Nio is a growth stock, and it's trading cheap

Despite all the challenges in 2022 -- especially COVID-19 disruptions in China that forced temporary production shutdowns – Nio's deliveries hit a record monthly high in November, taking the company's cumulative deliveries since inception to 273,741 units. Aside from ET5, sales got a lift from two new models that Nio began delivering in 2022: its flagship sedan ET7 and mid-large SUV ES7.

NIO Chart

NIO data by YCharts

With new launches coming up, Nio's revenues should only head higher. And if Li's words are anything go by, the company could break even by 2024.

As for cash, Nio had around $2.5 billion in cash and cash equivalents as of Sept. 30, 2022. Including short-term investments and restricted cash, its liquidity was around $7 billion.

Nio clearly has a lot going for it, and although investing in a Chinese stock may seem risky, Nio's electric cars have already been on the roads for several years now, and they're generating meaningful sales. For a growing company that brought in nearly $6 billion in revenue in the past 12 months, buying the stock at a market capitalization of $18 billion sounds like a great bet for investors in EVs.