One Chinese electric vehicle (EV) maker has differentiated itself from the crowd. It has grown by selling extended-range electric vehicles (EREVs) that utilize a small onboard gasoline engine to boost vehicle range. But Li Auto (LI 6.06%) also just came out with its first pure electric model earlier this year.

Investors were hoping the fully electric Li Mega would help boost sales beginning in the second quarter. But Li's second-quarter earnings report showed it only boosted vehicle revenue by 8.4% year over year. That, along with other factors, has the stock tanking on the quarterly report. Li Auto shares were lower by 15.9% as of 12:45 p.m. ET Wednesday.

Li Auto is a profitable EV maker

The EV maker did report better-than-expected second-quarter results. It earned about $0.10 per share, slightly ahead of analyst expectations. Sales of about $4.4 billion met estimates, according to FactSet Research. That makes Li one of the few profitable global EV makers.

But investors today are reacting to the headwinds that still exist. Vehicle margin declined on both a year-over-year and sequential basis. That's a result of lower vehicle prices. In its news release, both CEO Xiang Li and CFO Tie Li noted "intense" market competition.

The company recently branched out beyond its EREV lineup with its first pure electric vehicle. The Mega, a seven-seat multipurpose vehicle, was launched in March. But in the current environment of strong competition amid a slower growing market than many anticipated, the launch has investors somewhat disappointed.

Management expects increased vehicle deliveries and revenue in the third quarter. But for now investors are backing away from Li Auto stock likely until the landscape improves.