Chinese electric vehicle makers are on a tear.

On November 12, after reporting a strong third quarter, the New York–listed shares of Guangzhou-based Xpeng jumped 33%. Nasdaq-listed Li Auto’s share price leaped 27% the same day, ahead of its own earnings report on November 13. Meanwhile, NYSE-listed Nio—the only one of the three carmakers with more than a year’s trading history—surged 12%.

That 12% jump is the latest in a yearlong rally that has boosted Nio’s share over 1,000% since January, when its shares traded at below $4. With a market cap now over $65 billion, loss-making Nio is close to $10 billion more valuable than U.S. auto industry stalwart General Motors.

But it’s likely that investors are just hedging their bets on any Chinese automaker rather than backing Nio specifically. Beijing has set a target for EV sales to account for half the market in 2035, and China’s domestic manufacturers are all seeking to lead the pack.

U-turn

Nio’s soaring stock marks a significant change in investor appetite for the six-year-old automaker. Since going public in September 2018, the company had mostly traded below its debut price, and in 2019 it received what amounted to a $1 billion government bailout.

The company has made some changes to its business model that appear to have improved sales, but Nio’s runaway stock gains are more indicative of a broader trend, with U.S. investors casting a wide net to catch the next leader in electric vehicles.

“There is a spillover of investors searching for the next big thing,” Bill Russo, founder and CEO of Shanghai-based investment advisory Automobility, told Fortune in August, shortly after Nio rival Xpeng went public in New York and barely a month after another competitor Li Auto raised over $1 billion through its Nasdaq listing.

In the first half of the year, Tesla had emerged as China’s No. 1 EV seller, signifying a “turning point” in the market, Russo said. Prior to that, industrial or fleet buyers, such as public transport and taxi firms, were responsible for most of China’s EV sales. Tesla’s rise indicated an advancing market for consumer EVs.

Buoyed by Tesla’s strong performance, Xpeng’s shares rallied 40% on their first day of trading. Compare that with Nio’s debut in 2018, when shares fell immediately and were trading at 80% below their IPO value 12 months later.

Gear change

Investor confidence in China’s EV industry seemed to be flagging when Nio debuted two years ago. Government EV subsidies that had enabled EV startups like Nio to enter the market by bolstering demand were set to expire just two years later in 2020. Nio’s financials were bleak, too. At the time it filed its prospectus, the Shanghai-based company had only shipped 500 units and was $500 million in debt.

The automaker still isn’t profitable. Last year, as Nio’s cash flow entered dire straits, it signed a $1 billion joint venture agreement with a state-owned enterprise to produce down-market cars. The partnership provided Nio with a much-needed cash injection but broke the company’s premium-focused business model.

Recent changes to Beijing’s subsidy scheme might further benefit Nio. In April, Beijing decided to extend its subsidy program until 2022 for cheaper passenger vehicles, and the government said it would provide subsidy support for EV firms that manufacture cars with swappable batteries, regardless of price. That policy gives Nio, which is pioneering battery-swapping services, greater flexibility on how it prices its models.

The subsidy extension comes as Beijing sets a target for new energy vehicles (NEVs)—meaning electric, plug-in hybrids, and hydrogen-powered cars—to account for 20% of China’s auto sales by 2025.

By 2035, all new auto sales have to be “eco-friendly,” Beijing decreed, with 50% being NEVs and the remaining half filled by regular hybrids. NEVs currently occupy around 5% of China’s market, which still makes China the world's No. 1 market for electric vehicles.