Li Auto, one of China’s leading electric vehicle (EV) manufacturers, found itself at the center of a market storm on September 26, 2025, as its stock price tumbled by 5.62% to $24.36. The sharp decline came on the heels of a major announcement from China’s Ministry of Commerce: starting January 1, 2026, all domestic EV makers hoping to export their vehicles will be required to obtain a special export license. The move, widely reported by outlets including GuruFocus and The Motley Fool, signals a significant tightening of regulatory oversight in China’s rapidly expanding EV sector.
China’s new licensing regime, which will only grant permits to EV manufacturers and their officially authorized partners, is designed to regulate the country’s booming EV export industry and safeguard its global reputation. According to Reuters and Bloomberg, the Ministry of Commerce made clear that the policy aims to “protect the brand image of Chinese electric vehicles and prevent excessive competition and reckless exports.” The government’s intention is to prevent the kind of unregulated trading that could damage both the industry’s image and the delicate price order in international markets.
For Li Auto, the timing couldn’t be more critical. The company has been riding high on domestic and international demand, selling over 500,000 vehicles in 2024 alone—a figure representing about 4% of China’s passenger new energy vehicle market, according to GuruFocus. China itself has asserted its dominance as the world’s largest car exporter, shipping 5.5 million vehicles abroad in 2024, with a staggering 40% of those being electric. The surge in EV exports has been nothing short of meteoric: as reported by digital newsroom journalist Choi Ki-sung, China exported 1.65 million electric vehicles in 2024, a figure that doubled compared to just two years prior.
But as the export numbers climb, so do concerns in Beijing. The new licensing rules aren’t coming out of the blue. China has already imposed similar restrictions on traditional internal combustion engine (ICE) vehicles and hybrid models, a move that industry watchers say was designed to control quality and maintain the prestige of Chinese-made cars abroad. Now, with the EV sector growing at breakneck speed, the government is extending its regulatory reach even further. Only Chinese automakers or officially approved corporations will be allowed to apply for these new export permits, a decision that’s likely to reshape the competitive landscape for years to come.
Market reaction to the announcement was swift and severe. As The Motley Fool noted, Li Auto’s American Depositary Receipts (ADRs) fell nearly 5% on the day the news broke, even as the broader S&P 500 index managed a modest 0.6% gain. Investors, it seems, are worried that the new policy could curtail the overseas ambitions of Chinese EV makers or at the very least slow their momentum. The licensing regime, according to the Ministry, is intended to “curb the activities of unregulated traders” and ensure that only reputable, well-supported brands make it to foreign showrooms.
Li Auto, which designs, develops, and manufactures premium smart new energy vehicles (NEVs), has been a poster child for the sector’s explosive growth. Its financials, as reviewed by GuruFocus, paint a picture of a company in transition. The automaker boasts a price-to-earnings (P/E) ratio of 23.05 and a price-to-book (P/B) ratio near its 1-year low at 2.42, suggesting it may be undervalued relative to its peers. Despite recent setbacks, including slowing revenue growth and an Altman Z-Score of 2.69—a figure that places it in a financial “grey area”—Li Auto’s long-term prospects remain intriguing. Its revenue has grown by 7.2% over the past year and an eye-popping 174.2% over five years, while EBITDA increased by 7.3% year-over-year, reflecting operational improvements.
Yet, the company is not without its challenges. The new export licensing system could introduce fresh hurdles, especially for firms like Li Auto that have come to rely on robust foreign demand. The policy’s explicit goal—to “protect the reputation of China’s industry, specifically the thriving EV segment of the auto sector,” as described by The Motley Fool—means that only the most compliant and well-supported brands will likely thrive in the new environment. For those unable to secure the necessary permits or adapt to the stricter regulatory landscape, the road ahead could be rocky.
The broader context is just as important. China’s government has made no secret of its ambition to dominate the global EV market, and the new licensing regime is as much about strategic control as it is about quality assurance. With 5.5 million vehicles exported in 2024 and the share of EVs rising rapidly, Beijing is keen to avoid the pitfalls of oversupply, brand dilution, and negative publicity that can come from unchecked expansion. As Reuters and Bloomberg have reported, the authorities are particularly concerned about “reckless exports and lack of post-service,” which could tarnish the country’s hard-won reputation for automotive innovation.
For now, Li Auto appears to be in a relatively strong position. Its balance sheet remains robust, and its Beneish M-Score of -3.08 suggests it is unlikely to be manipulating its financial statements. The company’s growth trajectory, though recently slowed, still outpaces much of the industry. But with the export license rule looming on the horizon, Li Auto and its peers will need to tread carefully to maintain their competitive edge. As GuruFocus put it, the company “must navigate the upcoming regulatory environment carefully to maintain its competitive edge in the export market.”
The coming months will be crucial as Chinese EV makers scramble to adapt to the new rules, secure permits, and reassure investors. The export license system, set to take effect in just over a year, could reshape not only the fortunes of companies like Li Auto but also the global balance of power in the electric vehicle industry. As the world’s appetite for EVs continues to grow, all eyes will be on how China—and its leading automakers—respond to this latest regulatory challenge.
Amid the uncertainty, one thing is clear: the days of unfettered EV exports from China are coming to an end, and the next chapter in the industry’s evolution will be defined as much by government policy as by technological innovation and market demand.
