With all three of the major market indices gaining ground today, many stocks were seeing green, not least Li Auto (NYSE: LI). The Beijing-based company, which competes with U.S. EV leader Tesla (Nasdaq: TSLA), is benefiting from robust orders for its affordable L6 model, its maiden vehicle priced in the $41,452 area.

Investors rewarded the stock with a 4% gain, catapulting Li Auto shares closer to the $30 level. Li Auto stock has been on a tear of late, gaining 12.5% in May so far. 

Demand Turnaround 

Since Li Auto introduced the L6 in mid-April, its latest model, orders have soared to 41,000,  over 10,000 of which seemingly came over the weekend, according to data from The Wall Street Journal. The warm reception from China for L6 couldn’t have come a moment too soon after Li’s April deliveries were stuck in the doldrums.

In Q1, Tesla’s EV deliveries suffered an 8.5% decline year-over-year. Competition has been especially fierce in the local Chinese market, where companies like smartphone maker Xiaomi are entering the EV fray. Tesla has responded by pulling back on production of its Model 3 and Model Y vehicles in Shanghai and cutting hours for staff. 

According to Citi analyst Jeff Chung, who has a “buy” rating on Li Auto stock, early demand for the affordable EV model could spill over into the coming weeks. It might also be a good sign for Tesla, which has been slashing prices on its EVs, including its popular Model Y, across markets. 

China’s EV market is in the throes of a pricing war amid oversupply, one that is only expected to gain intensity in the coming months. Of the 150 new cars that are expected to be introduced in the Chinese auto market this year, 73% are expected to be EVs, according to China’s National Development and Reform Commission. 

Lei Jun, who is at the helm of Chinese tech company Xiaomi, shared his impression of the L6 from the Beijing Auto Show. He called the EV “quite amazing,” describing the interior as a “luxurious and comfortable experience.”

Is Li Auto a Buy in 2024? 

Wall Street analysts are mostly bullish on Li Auto stock, as evidenced by an average price target of nearly $50 per share, according to Tipranks, representing upside of close to 70%. The stock came close to that level last August, when deliveries for its vehicles were booming.

With customer demand returning for Li Auto’s newest model, the company is showing investors what they want to see. Nevertheless, it’s likely to be a roller coaster as demand ebbs and flows while EV makers in China jockey for position for the remainder of the year. Li Auto holds its annual general meeting on May 31.

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