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Electric vehicle sales in China are recharging amid a highly competitive market and stiff macroeconomic headwinds, as illustrated by strong June deliveries reports from Li Auto (LI), NIO (NIO), XPeng (XPEV), and others. Each of these stocks have been severely battered over the past two years due to slowing growth concerns, but they're driving higher today on the encouraging deliveries data.

• LI, which focuses on the luxury end of the EV market, saw June deliveries jump by 46.7% to 47,774 vehicles, meeting analysts' expectations. For the quarter, the company delivered 108,581 EVs, good for a 25.5% increase, bolstered by 20,000 deliveries for its recently launched L6 -- a five-seat premium family SUV. In its press release, the company stated that since Q2, it has "reclaimed the top spot in sales among China's emerging new energy auto brands."
• Meanwhile, June deliveries soared by 98% to 21,209 for NIO (NIO), setting a new monthly record for the company, while deliveries grew by 24% in June for XPEV.
• Slumping global consumer spending trends and widening cracks in its domestic real estate market have hurt China's economy, putting a dent in demand for EVs. However, the Chinese government has remained steadfast in its pledge to expand the EV market, aiming for EVs to account for 40% of all vehicles sold by 2030.
• Accordingly, the Chinese government has poured over $230 bln into the country's EV industry over more than ten years, including through hefty subsidies, according to a study conducted by the Center for Strategic and International Studies.
• Those subsidies, which now include an offer of nearly $1,400 to EV buyers who replace their gasoline vehicles, are providing another boost to EV sales. The strengthening EV market isn't only benefitting China-based manufacturers.
• In May, China deliveries for Tesla (TSLA) increased by nearly 17% month/month, following a decrease of 18% in April. It's worth pointing out that TSLA is expected to release its total Q2 deliveries report tomorrow morning with estimates calling for a qtr/qtr increase of about 15%.

The bottom line is that the strong June deliveries reports indicate that EV demand in China is charging up, although government subsidies and incentives are likely playing a significant role in the upswing.