At last check Li Auto shares jumped 6.8% to $34.81.
Jefferies also started coverage of both Xpeng (XPEV) - Get Altitude Acquisition Corp. Unit Report and Nio (NIO) - Get NIO Inc. American depositary shares each representing one Class A 蔚来汽车 Report with hold ratings. It put price targets of $54.50 on Xpeng and $60 on Nio.
Xpeng was trading at $52.50, up 9.8%, and Nio climbed 0.9% to $56.77.
"The perception that Chinese legacy automakers will be left out of this upgrade race is misplaced in our view, as partnerships with tech conglomerates can facilitate their entry and long-term development," analyst Alexious Lee said.
The tech/automaker collaboration is rising as China institutes reforms that make such partnerships more lucrative.
For example, China now lets automakers list their electric-vehicle subsidiaries, which is a signal for more funding and research and development, according to Jefferies.
"The national standard for 5G+ autonomous driving will be supported by a fully developed, self-owned, ecosystem led by the Chinese technology conglomerates," the Jefferies analyst wrote.
"The synergies with companies such as Baidu, (BIDU) - Get Baidu Inc. 百度 Report Alibaba, (BABA) - Get Alibaba Group Holding Limited American Depositary Shares each representing eight Report Tencent and other tech conglomerates are highly critical for the building up of deep-learning fleets through ridesharing/hailing and the reach for autonomy technology," Lee said.
China is the world's biggest automobile market. And contrary to concern about offshoring risk, Jefferies says global automakers are more likely to increase investment in the country as the industry looks poised to see growth in both volume and average selling prices.
"We are constructive on the outlook for new electric vehicles in China as the country pushes forward with the 'electrification to digitalization' trend," Lee said.