What happened
Chinese vehicle sourcing specialist U Power (UCAR -3.81%) had one of the most powerful upward share-price movements on Wednesday. Following news of a massive new incentive program from that country's government aimed at increasing the take-up of electric vehicles (EVs), U Power's stock closed the day almost 49% higher in value.
So what
Early that day, the Chinese government took the wraps off a 520 billion yuan ($72 billion) set of tax breaks for EVs and other alt-fuel vehicles. Those incentives will be in force until the end of 2027.
The move comes shortly after government officials promised to support the automotive industry. China, which has suffered from severe pollution in many of its regions and cities, also aims to make that industry's output cleaner with EVs and other more environmentally friendly models.
U Power, as a company that specializes in vehicle sourcing and battery-swapping solutions for EVs, stands to be an indirect beneficiary of the program. It is the largest such initiative enacted by the government to date.
U Power is a relatively recent arrival to the stock exchange, and as such is subject to big swings in share price. Its Wednesday bounce was from a relatively low base, as the stock is down considerably from its initial public offering (IPO) price.
Now what
The Chinese government is clearly worried about the country's flagging economy, which is due partially to slowing vehicle sales. The new program is large and sprawling, but it's unclear whether it will be attractive enough to spur a significant improvement in the industry.
