Xiaomi has made a remarkable step in the electric vehicle industry by unveiling its new SUV YU7. In just the first hour after launch, the company received nearly 300,000 pre-orders, putting Xiaomi in a competitive position against Tesla.
Introduction of YU7 and Market Reaction
At the YU7 launch event, Lei Jun, the CEO of Xiaomi, stated: "We will not accept defeat." Since its launch, the YU7, priced at around $35,000, significantly lower than the Tesla Model Y, has managed to attract a large number of customers in the Asian market.
Overview of Xiaomi's Achievements and Strategy
Analysts note that the YU7 features strong specs, and with integration into Xiaomi's digital ecosystem, the company has a unique position to reshape market dynamics. According to Felipe Muoz, a global analyst at JATO Dynamics, "the new Xiaomi is probably Tesla’s largest threat so far, not only in China but globally."
Tesla's Issues in the Chinese Market
With the launch of the YU7, Tesla is facing declining sales in the Chinese market, where battery electric vehicle sales dropped by 18% year-over-year from January to May 2025. Bill Russo's analysis emphasizes that Tesla is not only losing sales but also talent, as key figures left the company amidst rising competition.
However, while the market is becoming increasingly competitive, Tesla still remains a leader in battery technology and software in the US and Europe. The competition posed by new entrants like Xiaomi only intensifies the need for Tesla to adapt to the changing market conditions.
