Why Li Auto Stock Hit a Roadblock on Friday

Li Auto shares slammed the brakes Friday as investors hit the panic button.

Market Mechanics Malfunction

The electric vehicle stock found itself stuck in neutral while broader markets raced ahead. Trading volume spiked as institutional players executed massive block trades—flooding the market with supply that overwhelmed buyer demand.

Technical Breakdown

Key support levels crumbled like a cheap charging cable. The stock gapped down at open and never recovered momentum, trapped in a congestion pattern that would make Beijing rush hour look efficient.

Wall Street's Selective Vision

Analysts somehow maintained price targets that now require interstellar travel to reach. Because nothing says 'conviction' like sticking to yesterday's forecast while today's chart looks like a heart attack monitor.

Sometimes even the smoothest rides hit potholes—and Li Auto just discovered a canyon-sized one. The company's fundamentals haven't changed, but market sentiment shifts faster than a Tesla Ludicrous Mode launch.

New export license requirement

The Chinese commerce ministry announced that it is mandating export permits for domestic companies that want to sell their wares abroad. This requirement will kick in on Jan. 1, 2026, which at this point is only months away.

Image source: Getty Images.

The ministry said that its MOVE was aimed at curbing the activities of unregulated traders. It also wants to protect the reputation of the country's industry, specifically the thriving EV segment of the auto sector.

The licenses will only be available to EV makers and their authorized companies. The Chinese government has already placed similar restrictions on makers of traditional internal combustion engine (ICE) vehicles and EV/gasoline hybrids.

The EV market has exploded in China, and manufacturers in the country are also enjoying considerable success in foreign markets. It is currently the largest car exporter on the planet and likely to stay that way, with sales of roughly 5.5 million units in 2024. Not surprisingly, about 40% of this total consisted of EVs.

A watchful eye

Li Auto is a member of this club, and has fully taken advantage of the Chinese consumer's zeal for EVs (it also sells a FORM of hybrid). The government's announcement of the licensing regime is a clear attempt at gaining some control over EV makers in what's rapidly turned into a robust export environment.

Investors surely fear that the activities of these companies will end up being curtailed one way or another.