China is expanding its stimulus program by approximately 300 billion yuan ($41.5 billion) to subsidize purchases of passenger vehicles and consumer electronics, aiming to boost stagnant retail spending.

The update boosted Chinese electric vehicle stocks, including NIO Inc. ( NIO ) , XPeng Inc. ( XPEV ) , and Li Auto Inc. ( LI ) .

The National Development and Reform Commission and the Ministry of Finance made a joint announcement on Thursday.

The funding will come from the 1 trillion yuan to be raised this year by issuing ultralong special treasury bonds, Nikkei Asia reports.

The subsidies for trading in passenger cars for new energy vehicles will double to 20,000 yuan, up from the 10,000 yuan subsidy announced in April. Trade-ins for gasoline vehicles will increase to 15,000 yuan from 7,000 yuan.

China’s automotive industry, including services, accounts for nearly 10% of the country’s gross domestic product. However, domestic new vehicle sales in June fell below the year-earlier level for the second consecutive month.

The subsidies will also target the consumer electronics sector, where domestic sales have been sluggish due to the real estate slump.

The funds will also support manufacturing facilities, targeting equipment upgrades in the industrial, environmental, transport, and logistics sectors.

The People’s Bank of China (PBOC) executed an unscheduled lending operation at much lower rates, signaling a potential boost in monetary stimulus to support the economy.

Recently, China lowered key interest rates to stimulate its economy. This decision comes in response to several economic challenges, including weak second-quarter growth.

Price Actions: NIO shares were trading higher by 0.70% to $4.33 at last check Thursday. XPEV is up 2.55% to $8.26, and LI is up 1.88% to $19.19.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.