Shares of Chinese companies that make products from battery testing equipment to electrolytes jumped in mainland trading after Tesla said it will build its first car plant outside the US in Shanghai.
Fujian Nebula Electronics, which supplies testing equipment to lithium battery producers, jumped by the 10 per cent daily limit to 29.25 yuan in Shenzhen, with trading volumes almost double its 30-day average.
Guangzhou Tinci Materials Technology, an electrolyte producer, surged 6.8 per cent to 43.53 yuan and Shenzhen Senior Technology Material, a maker of coating membrane for lithium batteries, advanced 6.3 per cent to 37.69 yuan.
The news, which came from Tesla’s shareholder meeting on Tuesday, provided a buffer to Chinese electric car-related stocks that have been rattled this year by the government’s decision to raise the bar for subsidising purchases of new-energy vehicles.
A gauge tracking Chinese lithium battery-linked stocks has declined 12 per cent this year, according to data compiled by Great Wisdom.
Traders bet that Tesla’s expansion into China will boost demand for items from lithium to battery accessories and therefore reverse the bearish trend on the stocks.
Tesla’s factory will be located in an industrial zone in Shanghai’s Lingang area, according to earlier media reports. Shanghai Lingang Holdings, which owns the industrial estate, added 2.7 per cent to 22.62 yuan.
According to a CNBC report quoting Tesla chairman and CEO Elon Musk, the “dreadnought” plant will be capable of producing both batteries and assembling cars in the same location.
Other stocks linked to lithium battery manufacturing also rose. Shenzhen Capchem Technology, which makes electrolytes for the batteries, gained 5.7 per cent to 23.55 yuan and Shanghai Putailai New Energy Technology, a supplier of coating membrane, added 8.1 per cent to 61.36 yuan. Zhejiang Huayou Cobalt , a producer of the metal used for making negative poles of lithium batteries, added 3.2 per cent to 104.47 yuan.