(Bloomberg) -- A stunning reversal in Li Auto Inc.’s performance signals more pain for the stock is coming as competition in the world’s largest electric vehicle market intensified.

The automaker is set to finish the week at the bottom of the Hang Seng Index, paring most of last week’s 29% rally spurred by its earnings. More doubts over sales growth have resurfaced amid heightened price wars and disappointment over its newly launched battery minivan Mega.

“We do not expect Li Auto’s monthly sales to reach 70,000-100,000 units in 2024, as guided by the management, given the increasing competition and the disappointing market response to Mega,” UOB Kay Hian Holdings Ltd. analysts including Ken Lee wrote in a note dated March 6.

Fast money fled after Mega — touted as the world’s biggest electric car — reportedly drew lukewarm consumer feedback and social media responses, market watchers said. The reaction is a sign of the malaise in a slowing market with Chinese EV makers slashing prices in all customer segments. 

Even sector leader BYD Co. has also introduced more discounts in its cheaper-range cars this year. Rival Xpeng Inc. also cut prices on Sunday.

Mega, which starts at a price tag of 559,800 yuan ($77,768), was positioned as a local offering set to shake up the luxury MPV segment traditionally dominated by models like the Toyota Alphard and Mercedes V-class. There’s speculation that some orders for the luxury multi-purpose vehicle were canceled since the launch, according to UOB analysts.

Discounts helped Li Auto last year, as it more than doubled vehicle shipments and swung to a profit of 11.8 billion yuan. The earnings report sparked the rally last week. But, its forecast for the current quarter’s revenue is below analyst projections, with deliveries expected to shrink from the three months ended December.

Li Auto is betting that a lineup of 11 models by 2025 gives it a leg up. Its shares are only down about 2% year-to-date, compared to peers like XPeng and NIO Inc., which have lost more than 30%. 

“The hedge funds are a very dominant force in this space and their positions are measured in weeks if not days,” said Daisy Li, fund manager at EFG Asset Management HK Ltd. “Li Auto has proved its product capabilities and resilience amid price wars but it’s a lot of fast money trading these days.”

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