Bumper orders for new Xiaomi SUV heighten threat to Tesla
A person looks at the new electric SUV YU7 displayed at a Xiaomi store in Beijing, China May 29, 2025. (REUTERS/Tingshu Wang/File Photo)
SHANGHAI/BEIJING — Exceptionally strong initial orders for Xiaomi’s YU7 electric sport utility vehicle sent shares in the automotive newcomer to a record high on Friday. It fanned speculation that Tesla may have to cut prices to fight back.
In the first 18 hours after the YU7 went on sale, Xiaomi received some 240,000 orders. These are considered locked in. Buyers have paid either a hefty deposit for ready-to-deliver cars or a smaller deposit for cars still to be made.
Xiaomi is a smartphone and appliance maker. It made a huge splash in China’s electric vehicle market with its first vehicle. The SU7 sedan was launched in March last year.
The car has outsold Tesla’s Model 3 in China on a monthly basis since December. It has even earned a rave review from Ford CEO Jim Farley.
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The YU7 is only its second model and priced from 253,500 yuan ($35,360). It undercuts Tesla’s Model Y by nearly 4 percent. That will likely lead to more market share loss for the US automaker, analysts said.
At one Xiaomi car showroom in Beijing, dozens of people were gathered around the YU7.
Otto Shi, a 26-year-old Tesla Model Y owner who works in finance, said he was considering getting a YU7 for his father who currently drives a Mercedes-Benz.
“We could take turns to drive the Model Y and YU7,” he said. He added that he was impressed by Xiaomi’s prowess in supply chains. The SU7’s success had made him believe Xiaomi is the ideal Chinese brand to switch to.
Xiaomi’s shares shot 8 percent higher in early trade to an all-time high. But these later pared gains to close up 3.6 percent. They have risen by more than 70 percent so far this year to value the company at roughly $190 billion. This makes it the best performing large-cap stock in Asia Pacific, according to LSEG data.
What can Tesla do as Xiaomi gains ground?
Tesla’s domestic rivals are increasingly winning over Chinese consumers with snazzy new features. Meanwhile, Tesla’s share of the Chinese EV market has fallen from a peak of 15 percent in 2020. This settled at 10 percent last year, then down further to 7.6 percent for the first five months of 2025.
Citi analysts said in a note to clients that it may have to cut prices further, offer its “Full Self-Driving” (FSD) driver assistance software for free and offer more financing incentives if it is to compete successfully with Xiaomi.
Tesla counts China as its biggest market according to first-quarter sales numbers. It did not immediately respond to a request for comment. Last year, China accounted for roughly a fifth of its revenue.
Xiaomi CEO says YU7 trumps Tesla Model Y
Xiaomi CEO Lei Jun acknowledged that Tesla’s driving assistance software was superior. But he touted a range of other features where he said the YU7 outperformed the Model Y.
The YU7’s base model is equipped with a 96.3 kWh battery pack. It offers a driving range of up to 835 km on a single charge and supports high-power fast charging.
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That compares with a maximum range of 719 km for the redesigned Tesla Model Y. This uses a smaller 78.4 kWh battery.
Its backseats have drawers for storage under them and the YU7’s driver assistance software comes at no extra charge. Meanwhile, Tesla charges 64,000 yuan for its smart driving software, he added.
On Thursday night, Xiaomi said it had received 289,000 orders for the YU7 in the first hour after it went on sale. This was more than three times the level for its SU7 when it launched.
Lei has said, however, that a portion of orders was likely being placed by scalpers. On Chinese secondhand platform Xianyu, there were hundreds of people on Friday looking to sell their position in the order queue to others.
Aiming to mitigate such scalping, Xiaomi is now limiting each customer to purchasing two cars at most.
