Chinese smartphone giant Xiaomi has made a sensational entry into the electric vehicle market and is now directly competing with Tesla by launching its new YU7 SUV. The YU7 has been an instant hit: within just 18 hours of launch, Xiaomi confirmed receiving 240,000 “locked-in” orders for the SUV.
Priced Lower, Performs Better
The Xiaomi YU7 is about 4% cheaper than the Tesla Model Y. While the Tesla Model Y is priced at 263,500 yuan, the YU7 comes in at 253,500 yuan. Despite the lower price, the YU7 boasts more features and better overall performance compared to its segment rival.
Building on the Success of SU7
Earlier, Xiaomi’s first electric car, the SU7, took the market by storm. Since December 2024, the SU7 has been outselling the Tesla Model 3 every month in China. With the arrival of the YU7 SUV, Tesla’s dominance faces renewed threats in the region.
Tesla’s Declining Market Share
Tesla’s market share in China’s electric vehicle segment has been steadily shrinking. In 2020, Tesla held a 15% share, but in the first five months of 2025, this dropped to only 7.6%. Analysts predict that the launch of the YU7 SUV could accelerate this downward trend for Tesla.
Superior Battery and Extended Range
The Xiaomi YU7 SUV can travel up to 835 kilometers on a single charge, thanks to its hefty 96.3 kWh battery pack. In comparison, the Tesla Model Y offers a range of 719 kilometers with a smaller 78.4 kWh battery. This gives the YU7 a significant edge in both battery capacity and driving range.
Advantage in Software and Features
Tesla charges customers an extra 64,000 yuan for its smart driving software, whereas Xiaomi offers similar drive-assistance features for free in the YU7. Additionally, the YU7 boasts innovative touches such as drawer-style storage in the back seat, enhancing convenience for passengers.
Expert Opinions
According to analysts at Citi, if Tesla wants to remain competitive, it will need to lower its prices and offer its smart driving software free of charge. Otherwise, companies like Xiaomi are poised to rapidly eat into Tesla’s market share in China.
