Nio (NYSE:NIO) stock is in a slump. It’s not anywhere near the extent of punishment it suffered in 2019 when NIO stock plummeted 85% in 8 months. However, NIO is down 29% from the end of June when it was trading just over the $53 mark. And it’s down about 30% since the start of the year. This wasn’t supposed to be the trajectory of 2021. Certainly not after Nio began firing on all cylinders and the stock posted a gain of 1,110% in 2020.

As NIO was starting its slide in July, I wrote that the dip (20% at the time of publication) was an opportunity. I still believe that is the case.

The global chip shortage has turned out to be a bigger and longer-lasting issue than expected. That’s continuing to hurt all car-makers, not just Nio. There are other factors at play — including a huge stock offering — but Nio is a leading electric vehicle (EV) maker in the world’s largest markets for electric cars.

The slump in NIO stock has lasted two and a half months, but it won’t last forever. Here’s why.

The Good News for NIO Stock

First, let’s take a look at the good news for Nio moving forward. Nio in 2020 and 2021 bears little resemblance to the Nio of 2019. Back then, the company was lurching from disaster to disaster. It almost felt like a lost cause.

Today, could not be more different. Nio’s EVs are demand. Its assembly lines are humming, and every month this year the story has been the same: massive year-over-year growth in vehicle deliveries. In July, it was 7,931 vehicles for 124.5% year-over-year growth.

The company’s BaaS (Battery as a Service) has proved to be a canny move. Leasing the battery separately from the rest of the car lowers purchase costs for consumers. It makes an EV more practical in Chinese urban areas where charging stations can be difficult to find. Battery swapping also made Nio EVs eligible for Chinese government subsidies.

Nio may be facing increasing competition in China, but the company is not going to be relegated to its home market. Nio has global expansion plans, and its foothold starts with EV-friendly Norway.

All of these factors were big parts of the NIO stock growth story that began in 2020 and peaked with a $62.84 close on Feb. 9. 

Key Challenges: Chip Shortages and the Stock Offering

However, the case for NIO stock isn’t without challenge. In the first half of 2021, Nio seemed relatively unscathed by the global chip shortage. Other automakers have been idling production lines for weeks at a time while they wait for chips. Nio saw a slight hit in May, but still managed to goose production and deliveries to new levels. In June and July, it seemed unaffected. At that time, reports began to emerge that perhaps the worst of the semiconductor shortage was behind us.

That, as it turns out, was wishful thinking. Instead, it’s looking like automakers could face chip shortages into 2023.

Now, the issue is biting Nio in a meaningful way. August EV deliveries were still up 48.3% YoY, but the 5,880 vehicles delivered in August fell well below July’s numbers. The company warned of supply chain constraints, while lowering delivery projections for the third quarter. 

On Sept. 7, NIO stock was jolted when the company announced it was offering $2 billion in shares. That was a big move. Naturally, it resulted in NIO stock slipping further. 

Bottom Line on NIO Stock

When I wrote about Nio in July, I noted that the investment analysts polled by CNN Money rated NIO as a “Buy” with a $59.60 median price target (with about 40% upside). 

Now that July’s dip has turned into a lengthy slump, are those analysts losing faith? Hardly. NIO stock remains a consensus “Buy.” The current median 12-month price target has risen to $61.18, for 63% upside. NIO stock also retains its B-rating in Portfolio Grader.

The bottom line is that if you’re looking for an EV stock that offers strong long-term growth potential, China’s Nio should still be on your short list.   

On the date of publication, Louis Navellier had a long position in NIO. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.

The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Louis Navellier, who has been called “one of the most important money managers of our time,” has broken the silence in this shocking “tell all” video… exposing one of the most shocking events in our country’s history… and the one move every American needs to make today.