Chinese auto maker Li Auto raised $1.1 billion in an IPO on Nasdaq on last Thursday, valuing the five-year-old electric vehicle maker at around $10 billion. The Beijing-based firm is the latest China EV manufacturer to join the American market and comes at a time when Chinese stocks are facing greater scrutiny in the U.S.

Li Auto, alternatively known as Lixiang, was founded in 2015 by its CEO and chairman Li Xiang, for whom it's named. The company is backed by China’s largest consumer services app, Meituan, as well as Beijing Bytedance, which owns short-video app TikTok.

Unlike most other electric vehicle makers, Li Auto specializes in so-called extended range electric vehicles (EREVs), which can be powered by either electricity or gasoline. The hybrid engine compensates for China’s sparse EV-charging infrastructure, Li Auto says, and serves as a better gateway for weaning consumers off of petrol-powered cars. Since shipping its first model in late 2019, the company has sold around 10,000 units.

Li emerged on the Nasdaq two years after Chinese rival Nio listed on the New York Stock Exchange. Unlike Li, Nio deals exclusively in electric vehicles; it's sold upwards of 40,000 cars since it was founded in 2014. Nio’s shares have risen 70% this year, after plummeting 80% in the 12 months following its 2018 IPO. The EV maker’s stock is now trading above its IPO price.

Li Auto’s shares surged 43% on its first day of trading.Another Chinese electric automaker, Xpeng, is reportedly also planning for a U.S. IPO this year.

“The U.S. market clearly still has a large appetite for electric vehicles, but it’s frothy and there is probably a bubble,” Tu Le, founder of consultancy Sino Auto Insights, told the Financial Times. The interest in Chinese EV companies appears to be fueled, in part, by Tesla’s stock performance, which has soared 500% this year to become the world’s largest auto maker in July.

The timing of the Chinese EV IPO streak is curious, since it comes at a time when Washington is less welcoming of Chinese stocks than Wall Street is.

Following Nasdaq's move to delist Luckin Coffee in May after the company was found to have fabricated sales worth $310 million, the Senate passed a bill that would hold U.S.-listed foreign firms—primarily Chinese ones—to greater accountability. (Luckin dropped its appeal against delisting in June.)

Specifically, the bill proposes that foreign firms be delisted if the Securities and Exchange Commission (SEC) is unable to obtain company audit documents for three years. Beijing opposes turning over company audits to the SEC, claiming the documents contain state secrets. The legislation is currently waiting to be reviewed by the House.

A number of U.S.-listed Chinese firms have either delisted or sought secondary listings closer to home since Washington increased its focus on market regulation. China's largest chipmaker, SMIC, delisted from NYSE last year; China's largest travel agency, Trip, is reportedly planning to delist from Nasdaq; and Alibaba, China's leading e-commerce site, had a secondary listing in Hong Kong last November.

In its filing with the SEC, Li Auto admits that the SEC currently isn’t able to inspect the company’s audits and warns that, should the Senate bill turn into law, they could be required to delist. But the Peterson Institute for International Economics, a U.S. think tank, points out that delisting Chinese companies from the U.S. won't cut them off from U.S. capital.

If a Chinese company shifts from the U.S. market to another, existing shareholders will be given the option to swap for shares in the new listing. Alternatively, if the company is brought private, current shareholders will be bought out at a premium. Hopes for a premium buyout are likely why shares in Luckin continue to trade over the counter—meaning not through Nasdaq's official channels—as investors still believe there's money to be made.

Similarly with Li Auto—there's a risk it will be forced off Nasdaq in the future, but investors still see the benefit of getting in on the ground floor.