The cells that encase the nerves (receptors) get infected, and become inflamed. This then means the nerve cells cannot transport nutrients along them, and can't send a signal. Eventually that can lead to death of the nerves as well. This is also the way they found COVID to spread through the brain, not through the nerves themselves but the supporting epithelial (I think is the right name) cells.

Source: my professor at the time who was working on the research it told me