(Bloomberg) — Shares of China’s electric-vehicle makers are trouncing global industry leader Tesla Inc., bolstered by Beijing’s consumption incentives and heavy dip-buying from investors.

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American depository receipts of Nio Inc., XPeng Inc. and Li Auto Inc. have surged at least 64% each over the past month to be among the top gainers in Chinese stocks traded in the US. The sharp rally reflects improving sentiment following a monthslong slump due to worries over high valuation and supply bottlenecks.

Their gains easily beat Tesla’s 17% advance, with the divergence in China and US policy outlooks and investor jitters over how Elon Musk will fund a potential Twitter Inc. deal weighing on the EV giant’s share price.

China’s EV industry hit a trough during Shanghai’s lockdown — when not even one car was sold in the city in April and factories were forced to shut down or operate under heavy restrictions. Authorities have since unveiled a slew of stimulus measures to revive the sector, including subsidies, higher quota for car ownership in Shanghai and Guangdong, and a possible extension of purchase tax exemption for new energy vehicles.

READ: Tesla Cut, Chinese Rivals Added by Oldest EV Fund in Korea

“There are fund flows buying the dip and capturing the sector’s bounce,” said Andy Wong, fund manager at LW Asset Management Advisors Ltd. in Hong Kong. However, short-term upside potential has narrowed following the recent surge, he noted.

Meanwhile, Tesla’s shares have seen huge swings and are down about 36% from this quarter’s high in April, even though the firm has staged a remarkable comeback in terms of its production in China. The US automaker’s looming job cuts, uncertainty over Musk’s Twitter deal, and his latest comments about new factories in Germany and Texas losing money are keeping the stock in check.

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Priced In

The market performance is also emblematic of the diverging growth and policy outlooks in China and the US. Year to date, the Nasdaq Golden Dragon China Index has fared better than the broader Nasdaq gauge by almost 18 percentage points, as Chinese firms are expected to ride on policy stimulus while US peers languish under aggressive monetary tightening and fears of a recession.

READ: JPMorgan China Fund Ramps Up Bets on Tech as Bullish Calls Grow

Yet after such heady gains in China’s EV stocks, investors are in search for further catalysts that can sustain the momentum. Li Auto’s 14-day relative strength index is at 84, well past the 70 level that signals to some investors that the stock is overbought. Readings for XPeng and Nio are also around 70.

Improving delivery figures offer some comfort as China’s economy gradually heals from the damage inflicted by Covid-19 lockdowns. Li Auto, the largest by market cap among the Chinese trio, delivered 11,496 units in May, up 176% from April and more than double last year’s level.

“Looking forward, we think catalysts would need to come from earnings and the economy improving” as most of good news for the Chinese auto sector has been priced in, Eason Cui, an analyst with Sunwah Kingsway Capital Holdings Ltd., wrote in a note earlier this month.

READ: Li Auto Unveils New Luxury SUV to Compete With Mercedes, BMW

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