Mainland Chinese investor s enamoured by Tesla’s 50 per cent rally in 2021 may soon get a shot at buying Xpeng and Li Auto, two of the closest challengers to the world’s leading electric-vehicle (EV) maker, in their own backyard. The home-grown EV makers, which began trading in Hong Kong last year, could be eligible for the Stock Connect programme from as early as this quarter when they meet the six-month trading rules, according to Citic Securities. They could join medical equipment maker Shanghai Microport Medbot and food wholesaler China Dili Group and 19 others in making the cut, it added The addition will give onshore investors access to two of the fastest-growing Chinese carmakers just when EV sales are taking off in the world’s biggest market . Such buying support offers tailwinds to the stocks that are forecast by analysts to appreciate by 51 to 69 per cent over the next 12 months. “We like all the leading new-energy vehicle start-ups including Xpeng, NIO and Li Auto, as we believe the current auto industry that evolves faster than ever before needs pioneers, not followers,” Shi Ji, executive director of CMB International Securities, said by email on Friday. “Consumers have become more demanding and the trio have been creating new values.” Xpeng has gained 5.8 per cent since its secondary listing in Hong Kong in early July, while the Hang Seng Index slumped 10 per cent, according to Bloomberg data. Li Auto, however, has lost 3.1 per cent since it started trading in August, while the benchmark index fell 5.7 per cent. China’s EV sales soar, putting world’s largest market on track to surpass 2025 target Tesla soared from US$83.66 at the end of 2019 to US$1,056.78 at the end of 2021, generating US$986 billion of wealth and enriching CEO Elon Musk and global funds. The rally has fired up key suppliers like Contemporary Amperex has underpinned a 45 per cent surge in the Hang Seng Shanghai-Shenzhen-Hong Kong autonomous and EV Index since its inception in March last year. Guangzhou-based XPeng has a 12-month price target of HK$263.74, implying a 51 per cent upside, according to consensus from analysts tracked by Bloomberg. The price target for Beijing-based Li Auto is HK$193.75, or 69 per cent higher than its price on Friday. To be sure, inclusion into the Stock Connect programme is no guarantee of outperformance. Mainland buying power has not propelled short-video platform operator Kuaishou Technology, drug maker HutchMed China and nine other stocks since the batch was included in the September revision. China funds are flooding Hong Kong’s market in search of value as they dodge US sanctions An opportunity to increase China exposure is likely to emerge after the first quarter, when the current wave of Covid-19 infections recede, and investors get a better understanding of the earnings impact from recent macro and policy changes, according to RBC Wealth Management. “When the time comes, we would look at opportunities benefiting from secular growth trends, including electric vehicles, renewables, and advanced manufacturing processes such as robotics,” the money manager said in a January 20 report. EV sales in China surged 169 per cent to nearly 3 million units in 2021, with the NEV sector making up 14.8 per cent of deliveries and set to beat the 20 per cent penetration this year ahead of the official 2025 target . Deliveries at XPeng jumped 263 per cent in 2021, while Li Auto recorded a 177 per cent surge. Chinese EV makers Xpeng, Li Auto, NIO report surge in deliveries in December to cap banner year Still, XPeng and Li Auto have yet to generate any profit. Net loss at XPeng probably widened to 5.3 billion yuan (US$835.4 million) last year from 4.9 billion yuan in 2020, according to Bloomberg data. Li Auto’s loss may have widened to 767.5 million yuan, from 151.7 million yuan. Onshore investors have been exerting more influence on the Hong Kong market since the Stock Connect was launched in 2014. They contribute about 11 per cent of the market’s turnover and their holdings of Hong Kong-traded shares totalled HK$2.2 trillion (US$282.5 billion), or 5 per cent of the total market, according to Citic Securities. “We are positive for both, anticipating 2022E sales volumes of 180,000 – 220,000 units, about doubling their 2021 sales volumes,” Shi at CMB International said. “We think Xpeng was born to be a tech pioneer. We think Li Auto’s culture of focus, or ‘less is more’, is difficult to be mimicked by other carmakers.”