What happened

Nio (NIO -5.00%) stock crashed on the last trading Tuesday of 2022, slumping nearly 7.9% as of 10 a.m. ET. The electric-vehicle (EV) maker launched two new models at the 2022 Nio Day event held this past weekend, with CEO William Li confirming the company will launch more EVs and products in 2023. These updates could have sent Nio stock higher on any other day, but today's a whole new ball game, thanks to a COVID-19 wave sweeping China.

Just as investors were starting to get jittery about how this could hurt manufacturers in 2023, Nio revealed that the damage is already underway and hurting car deliveries. This comes less than a month after the EV maker hit record monthly deliveries.

So what

This morning, Nio said it's facing multiple challenges in the wake of the widespread outbreak of the omicron coronavirus variant in China. Because of this, it couldn't produce cars at full capacity in December.

As a result, Nio cut its fourth-quarter deliveries outlook sharply to 38,500 units-39,500 units. The EV maker guided for deliveries of 43,000-48,000 units for the fourth quarter when it reported earnings on Nov. 10.

However, just days later, China eased COVID controls in response to mass protests, abandoning its zero-COVID policy. Coronavirus cases zoomed and are now hitting record highs nationwide, as of this writing. Nio, of course, couldn't have seen this coming and was left with no choice but to roll back its Q4 guidance today.

It's important to note that Nio isn't the only automaker bearing the brunt of COVID disruptions. This past weekend, EV-leader Tesla (TSLA -1.92%) extended a planned eight-day production halt at its Shanghai plant, according to The Wall Street Journal, with reports citing the massive coronavirus wave in China as the primary reason behind Tesla's production decisions.

Now what

To be fair, this isn't anything new or shocking. Nio had suspended production temporarily for weeks in 2022 alongside other automakers when China stuck with its zero-COVID policy, but it bounced back quickly and delivered a record number of vehicles in the month of November.

I wouldn't be surprised if Nio's deliveries and sales play catch-up as 2023 progresses. Undeterred by the disruptions, Nio launched its flagship coupe SUV, EC7, and ES8, another SUV, on Dec. 24, designing both models on its latest second-generation platform.

As of now, Nio has several new launches planned for 2023, including models that could rival Tesla's top sellers. If things go as planned, it could even start delivering a mass-market brand in 2024.

Granted, Nio's sales growth could decelerate in the near term, given the macroeconomic headwinds, but the industry overall could suffer. Right now, the further Nio stock drops on panic-selling, the more alluring the beaten-down EV stock starts to look for investors wanting to play the EV megatrend.