Nio, XPeng, Li Auto Rally After China Confirms EV Trade-In Subsidies Will Extend Into 2026

China’s 2026 trade-in incentive details lifted U.S.-listed Chinese EV stocks as investors welcomed clearer demand support.

• China outlined 2026 trade-in subsidies of up to 20,000 yuan for eligible new energy vehicle purchases.
• Shares of Nio and XPeng climbed nearly 6%, while Li Auto edged roughly 1.3% higher.
• The extension provides policy visibility as passenger vehicle sales remain weak.

U.S.-listed shares of Chinese electric vehicle makers rose on Tuesday after China confirmed that vehicle trade-in subsidies will be extended into 2026, easing uncertainty over policy support for auto demand next year.

Shares of Nio and XPeng climbed nearly 6%, while Li Auto edged roughly 1.3% higher.

Policy Extension Brings Clarity

China’s National Development and Reform Commission and the Ministry of Finance said in a joint notice that trade-in subsidies for new energy vehicles will remain in place through 2026 as part of a broader consumer goods trade-in program. 

Under the policy, consumers who scrap older passenger vehicles to purchase eligible new energy vehicles could get subsidies amounting to 12% of the vehicle price, up to 20,000 yuan ($2,850). 

Those trading in vehicles, as opposed to scrapping them, can get subsidies of 8%, up to 15,000 yuan ($2,140). The incentives apply to vehicles listed in China’s catalogue qualifying for purchase tax reductions.

Taxes And Demand Backdrop

The purchase tax exemption on EVs in China is in place through the end of 2025. Starting in 2026, electric vehicles will be subject to a minimum 5% purchase tax, which can be reduced by 50% through 2027 up to 15,000 yuan ($2,210) per vehicle. Automakers, such as Nio, have said they would cover the tax themselves if deliveries are pushed into the next year.

The policy update comes as China’s retail passenger vehicle sales fell nearly 1% year over year in October and dropped 8.5% in November.

XPeng Seen As A Preferred Play

On Monday, Morgan Stanley named XPeng among its preferred China auto stocks for the first half of 2026. 

The brokerage said the sector faces cyclical and policy challenges next year but sees these as potentially “territorially and technologically beneficial,” citing XPeng’s domestic resilience, and overseas growth. The analyst sees a chance for the stock to be valued higher if the company generates revenue or growth outside its core car-selling business.

How Did Stocktwits Users React?

On Stocktwits, retail sentiment was ‘extremely bullish’ for Nio amid ‘high’ message volume, while XPeng and Li Auto saw ‘neutral’ sentiment, with ‘normal’ and ‘low’ message volume, respectively.

One user said XPeng, Li Auto and Nio could see more than 25% upside if December 2025 sales show relative strength, adding that recent declines were driven by third quarter losses and weak fourth quarter sales guidance, which could reverse if sales outperform expectations.

Another user said Nio could achieve volume growth within China as its brands gain popularity, adding that overseas expansion is secondary and expecting the stock to surpass $30 by Dec. 30, 2026.

So far this year, Nio is up 29%, XPeng has climbed 84%, while Li Auto is down 28%.

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