Since September, excitement for Nio (NYSE:NIO) stock has cooled down again. After surging on analyst upgrades, shares in the China-based electric vehicle (or EV) maker have fallen back considerably, as headwinds in its home market weigh on shares.

Nio is being indirectly affected by the myriad of challenges the Chinese economy is now facing. More directly, issues such as continued pandemic shutdowns, and related supply chain bottlenecks, are having a direct impact.

Despite these challenges, the company continues to move full steam ahead with its expansion into Europe. Just last week, Nio unveiled its plans to expand its European presence. Yet instead of helping to counter its China issues, it’s possible this rapid expansion makes the situation worse.

Right now, this ambitious EV maker, aiming to become a global brand on par with Tesla (NASDAQ:TSLA), may be overextending itself. This could result in more pain ahead for investors.

NIO Stock: From Surge to Plunge

Although the broad market sell-off last month has played a big role in Nio’s recent stock price performance, factors more directly related to the company have also played a role in its slide from the low-$20s to the low-teens per share.

China is in the midst of a severe economic slowdown. The impact of this is already having an impact on EV demand in the world’s largest electric vehicle market. As Reuters reported Oct. 11, Chinese EV sales growth last month came in at its slowest pace in five months. Coupled with softening demand, are the above-mentioned production headwinds.

Both these factors explain why Nio reported underwhelming year-over-year deliveries growth (2%) during September. While there’s been excitement about a possible re-acceleration of deliveries/sales growth this quarter, as these issues persist, the prospects of this playing out are murky at best.

With this, I wouldn’t count on NIO stock, after its recent plunge, experiencing another big surge anytime soon. In fact, I would expect the opposite. Not only will its existing China-related issues weigh on shares, further developments with its initial moves to become a global EV maker could also drive the stock down to lower prices.

Nio’s Big Move into Europe Could Fail to Pay Off

On Oct. 7, Nio held its European launch event, as reported by InvestorPlace’s William White that same day. At the event, held at Nio’s offices in Berlin, Germany, the company detailed its plans to launch in more European markets, as well as its plans to introduce its latest vehicle models in Europe.

As White reported, this event failed to have a positive impact on NIO stock. Instead, shares sank lower, although this can be attributed more so to the indirect and direct issues I discussed above. That said, this element to Nio’s overall “story” may soon begin to have a negative impact on the performance of its shares.

Up until now, investors have given Nio the benefit of the doubt when it comes to its penetration of new EV markets. In the coming quarters, the market will have a better idea of whether the company has a shot of grabbing sufficient market share, or if it will fail to do so.

Given competitive challenges from Tesla (NASDAQ:TSLA), as well as from incumbent European automakers who have ramped up their respective EV offerings, Nio’s European results could underwhelm, further hurting Nio’s fading reputation as a possible “Tesla killer.”

Bottom Line on NIO Stock

At the same time Nio fails to live up to expectations in its home market, the same thing could happen with its entry into the European automotive market. Nio’s management could in hindsight realize that waiting for it to become established and profitable in China before going global was the better move.

However, the company has instead chosen to make the riskier move, by pursuing worldwide expansion as quickly as possible. If its latest gambit fails to pay off, Nio could find itself contending with a floundering, unprofitable European segment, all while its Chinese segment struggles with growth challenges, which could delay the move to consistent profitability.

In light of its existing headwinds, and the possibility of new challenges emerging, steer clear of NIO stock. Sentiment about this would-be “Tesla killer” could get even more negative from here.

NIO stock earns a D rating in Portfolio Grader.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.