Electric vehicle (EV) producers from China — specifically XPeng Inc (NYSE:XPEV), Nio Inc (NYSE:NIO), and Li Auto Inc (NASDAQ:LI) — have experienced a rally in their share prices this Friday afternoon. The upward momentum is attributed to investors' positive reception to recent policy announcements emerging from Beijing alongside expansion plans that signal enhanced global growth potential for these companies.
The compelling catalyst behind this surge is a freshly introduced regulatory framework by Chinese authorities called the "Energy Consumption Limits for Electric Vehicles Part 1 – Passenger Cars." This pioneering standard is the first mandatory energy consumption requirement for EVs worldwide, imposing a significant ceiling on electricity usage per distance traveled, adjusted according to vehicle weight.
To provide specifics, the regulation mandates that for conventional two-tonne SUVs, power consumption must not surpass 15.1 kilowatt-hours (kWh) for every 100 kilometers (approximately 62 miles). This new limit represents a tightening of about 11% compared to current energy usage baselines. Importantly, from January 1, 2026, any passenger EV model failing to meet this standard will no longer be authorized for sale in China.
Market participants appear to believe this regulatory move will reshape the competitive landscape by disfavoring less efficient, smaller-scale producers that cannot meet the enhanced efficiency benchmarks. Conversely, leading Chinese EV manufacturers with a track record of engineering platforms characterized by low power consumption are expected to gain benefits in terms of preserved margins and potentially increased market share.
When examining the positioning of XPeng and Nio, their current models already fall comfortably below the mandated 15.1 kWh/100 km threshold. Notably, XPeng’s primary battery-electric vehicles, including the G6 crossover and the P7 sedan, comply with the tightened limits applied to mid-sized vehicles. Similarly, Nio's ET5 sedan achieves efficiency margins that satisfy the future regulation well in advance.
In contrast, Li Auto's predominant L-series vehicles, which utilize a range extender system, fall under a distinct regulatory category and consequently face different energy consumption parameters. Additionally, its sizable Li Mega multipurpose vehicle is positioned only slightly above a relatively relaxed cap designed for larger vehicles. As a result, both XPeng and Nio may be structurally more advantaged by the new energy consumption rules compared to Li Auto.
Around the same period, XPeng's share price surged by close to 8%, fueled by a recent brand promotion event held in Doha, Qatar. The company showcased its key models—the G9 and G6 sport utility vehicles—and provided a preview of the upcoming P7+ sedan intended for the local market launch. This event highlighted the operational progress underway through XPeng’s exclusive distribution agreement with Pioneer Motors, illustrating a transition from planning to physical dealership presence and order acquisition.
Beyond the Middle East, XPeng also announced plans to initiate manufacturing operations in Malacca, Malaysia, starting in 2026. This facility would function as the company’s third localized production plant, aimed at lowering both shipping and production costs for shipments destined to the Association of Southeast Asian Nations (ASEAN) region and European markets. Collectively, these developments clarify XPeng’s trajectory toward volume expansion and potential margin enhancement, factors that have encouraged strong buying appeal among investors.
According to Benzinga Edge analytics, XPeng registered a Momentum score of 79.90, signifying noteworthy trading interest despite existing adverse indicators associated with short-, medium-, and long-term price trends.
Regarding market performance as captured by Benzinga Pro during Friday trading, XPeng shares advanced roughly 6.7%, reaching $20.88. Li Auto’s stock recorded a 3.13% increase, reaching $17.30, while Nio’s shares climbed by 4.38%, trading at $5.12. These movements exemplify collective investor engagement with Chinese EV equities following regulatory and strategic company updates.
This article is based on information reviewed and published with the assistance of AI tools, with editorial oversight by Benzinga editors.