What happened

Nio (NIO 6.55%) stock slumped Friday morning and was trading 6% lower as of 11:45 a.m. ET. 

Ironically, there's a hugely positive rumor about Nio floating around that could have driven the electric vehicle (EV) stock higher any other day. The overall market weakness and Nio's upcoming earnings report, though, seem to be making investors jittery today.

So what

In mid-2022, CEO William Li announced big growth plans for Nio, including building in-house battery packs. Nio is now reportedly planning to build its first battery plant in a bid to reduce its reliance on third-party suppliers like CATL, according to Reuters. The report says the plant will have an annual capacity of 40 gigawatt hours, enough to power 400,000 long-range EVs.

If true, this could be huge for China-based Nio as the battery is a key component in EVs, and EV manufacturers across the globe have faced hard times over the past year or so as battery costs skyrocketed and supply dwindled.

In yet another update from Chinese local media, Nio has inched one step closer to building cars for the masses by securing a site for a new factory.

Yet, investors in Nio are focused on the company's delivery numbers right now and are turning cautious ahead of the EV maker's quarterly earnings report, which explains why the stock tumbled today. To add to the selling pressure, higher-than-expected inflation in the U.S. and fears of a recession were pulling down stocks across cyclical sectors today.

Now what

Nio will report its fourth-quarter numbers on March 1. Production and supply constraints amid a surge in coronavirus cases in China have hurt Nio's operations in recent months. In January, for example, Nio's deliveries fell 46% sequentially to 8,506 vehicles. Although part of the decline was also because of the Chinese New Year holiday, investors don't want to see any further disruptions in the EV maker's production and deliveries this year after a challenging 2022.

2023 could eventually turn out to be a strong year for Nio and its stock, going by its growth plans. But investors aren't taking any chances today before they hear management's views in the days ahead.