What happened

After a strong start to 2023, shares in Chinese electric vehicle (EV) maker Nio (NIO 4.06%) plunged more than 30% from late January highs. But the stock was popping close to 10% Monday morning, and as of 11:22 a.m. ET today, it was still higher by 6.4%. 

So what

Nio made investors nervous when it provided its business update and first-quarter outlook earlier this month. The company said it had shipped more than 12,000 vehicles in February, nearly double from a year ago. Over 7,000 of those were the sedan models that it launched last year.

Nio ET7 smart electric sedan.

The Nio ET7. Image source: Nio.

But it projected delivering only 31,000 to 33,000 vehicles in the first quarter, a big drop from the more than 40,000 EVs it delivered in the fourth quarter. Yet some investors seem to think it might be time to get back into Nio stock. That could have been sparked by a Barron's report late last week that highlighted the strength of China-based EV makers, including Nio. 

Now what

Today's bounce also follows a jump in shares of competitor XPeng on Friday. The Barron's report quoted an interview with Wedbush analyst Dan Ives, in which he said, "The battle in China for EV market share is very fierce, and competition is a [mixed martial arts] match between BYD, Tesla, Nio, XPeng, and others."

That can be construed as both good news and bad news for Nio investors. Strong competition means the successful companies will need to be efficient, and there's the potential for price wars. But it also is an acknowledgment of the growth of companies like Nio, which delivered more than 120,000 EVs last year. So it shouldn't be labeled as a start-up company any longer. 

Some who are betting on its success apparently believed the stock's recent decline went far enough, and are starting the week buying into Nio shares.