China EV stocks jumped broadly on Tuesday, with Li Auto set to report earnings later this week. The rally came amid a bullish Citi upgrade for China equities and following robust February EV sales. Zeekr broke out to a new high.
Bullish China Upgrade, Surging EV Sales
On Tuesday, Citi analysts said U.S. exceptionalism has paused under the Donald Trump administration. While downgrading U.S. equities, the firm upgraded China stocks to overweight, citing the DeepSeek AI breakthrough, government support for the technology sector and attractive valuations.
On Monday, an analyst highlighted a shifting trend in China after robust February EV deliveries. Battery electric vehicles (BEV) are outpacing plug-in hybrid vehicles (PHEV) in a reversal of recent trends, RBC Capital Markets analyst Tom Narayan said.
BYD, which makes both BEVs and PHEVs, saw a 164% sales boom last month. Its startup rivals, including Li Auto, also grew February EV deliveries, while Tesla's sales fell to the lowest level since July 2022.
In China, Tesla is battling a price war and fierce competition, with archrival BYD and others making driver-assist software standard even on cheaper EVs. Deliveries of the new Model Y have begun, though China wait times are relatively short. Tesla has said a new affordable model will begin in 2025.
Tesla stock rallied 3.8% on Tuesday after plunging on Monday. BYD stock also rebounded 3.5%. The China EV stock is slightly extended from a recent breakout past 42, meaning shares are not in buy range.
Li Auto Earnings On Deck
Li Auto will report earnings on Friday. Analysts expect Li to report a 32% EPS decline with revenue up 4% to $6 billion.
Next week, XPeng is on deck March 18. Zeekr follows on March 20 and Nio on March 21.
Li Auto primarily makes extended range electric vehicles (EREVs), a type of plug-in hybrid vehicle. But the EV startup has expanded into battery electric cars with the Mega minivan. That hasn't sold well, but analysts have higher hopes for an upcoming line of BEV SUVs, including the Li i8.
Nio continues to work on a turnaround on the back of improving sales and cheaper vehicles. Some analysts say Nio's venture into mass-market and budget brands may hurt its premium image. But Nio argues the Onvo and upcoming Firefly brands will target a "broader global market" as China slows.
Zeekr released photos of the 9X, its first plug-in hybrid, ahead of its debut in April. Its 7X is seen as a Model Y rival.
Zeekr Stock Breaks Out Bullishly
In Tuesday's stock market trading, Zeekr stock rocketed 18.5%, making a 52-week high. The EV stock topped a 32.76 buy point. The relative strength line made a new high as the stock broke out, a bullish sign.
XPeng stock soared 17.1%, also pegging a new high. Shares have soared 123% in 2025 amid robust sales.
Li Auto stock jumped 7%, still below a 31.04 buy point. Nio stock climbed 17%, regaining the 200-day moving average.
Please follow Aparna Narayanan on X @IBD_Aparna for more coverage.
