Tesla Is Cooked. And It's All Xiaomi’s Fault

The air was still electric. Xiaomi’s new product press conference—full of news about vacuum cleaners, air conditioners, smartphones and tablets—ended about ten minutes ago. Now, everyone waited to pull the trigger on the most exciting thing debuting at the event: Xiaomi’s new electric car. 

Everyone already knew the Xiaomi YU7: a sleek, Ferrari-esque crossover, would be aimed right at the Tesla Model Y. But Xiaomi CEO Lei Jun just announced it would undercut even the Chinese-made Tesla by a sizable margin.

Given the wild success of the SU7 sedan, it was a no-brainer that the YU7 would likely see similar numbers. Everyone stood ready to plunk down about $700 to reserve it when the online portal opened up at 10:00 p.m..

By 10:03 PM, Xiaomi had received 200,000 orders. Xiaomi claims it received 289,000 orders within an hour of reservations opening, with 240,000 of them locking in as confirmed buyers. In a mere 60 minutes, the YU7 was essentially sold out until 2027.

And judging from what I’ve experienced behind the wheel of the YU7 on Chinese roads, Chinese buyers are in for a real treat. Everyone else, though, whether Chinese domestic or foreign imports, might be cooked. More so than usual. 

(Full Disclosure: Xiaomi covered my travel from Ohio to Beijing to drive the YU7, and tour its headquarters and factory.)

It’s not easy to talk to Xiaomi, perhaps by design.

When a brand mostly known to North Americans for earbuds, if it’s known for anything here at all, basically swept the Chinese sales charts and sold 200,000 units in a single year, the world took notice. From what we can see here in the West, Xiaomi flies in the face of the typical boilerplate Chinese auto industry criticism.

While other brands struggle to meet even half of their factory capacity, Xiaomi is full speed ahead yet can’t satiate the incredible demand it has. In China, the company is reconfiguring the market, or perhaps the market is reconfiguring to their presence. 

Yet, when it came for those in the West to figure out how they did it, or why Chinese people were so enamored by its first car, we were kind of left to fend for ourselves. Most English-language impressions of the SU7 were done via rentals or personal cars loaned to people in China (or the one randomly floating around Los Angeles), or by Chinese nationals who were kind enough to translate review impressions into English.

Maybe Xiaomi had good reason to be cautious. There’s certainly a bit of trepidation in the air right now for the Chinese auto industry, advanced as it may be. Whether it’s a zero-mile used car dumping scandal, overcapacity in Chinese factories, softer-than-expected demand for full EV models or BYD’s almost Walmart-esque price war clearly meant to squeeze out competitors (domestic or foreign), the country’s very real strides in the EV industry can easily be overshadowed by bad news. 

Even if we take the bitter with the sweet here, as most car companies will, there’s still a level of protection when it comes to ensuring new products get their fare shake and are insulated from events or a political climate that may be out of their control—or one that they may have contributed to.

As someone who covers EVs and follows the China market closely, this was frustrating. I can see and read online that the brand has been immensely successful in China, proving the point that tech companies can pivot to making cars. That was hardly a given before this. 

In the West, Apple officially gave up after years of an open secret that it had been trying to do a car or autonomous car service in some form. Even in China, where tech companies and car companies are naturally more willing to move in lockstep with each other, the idea of a smartphone and gadget company building a car isn’t necessarily a recipe for success. Huawei’s associated brands are somewhat successful, but the Chinese equivalent of Google, Baidu, had its model completely faceplant on the Chinese market.

Xiaomi proved everyone wrong. So, when the company invited a handful of international folks to take a gander at its factory and its latest car, I jumped at the opportunity. 

Why Xiaomi Got Into Cars 

Gallery: Xiaomi YU7 Review

Xiaomi is a very young company, starting in 2010 and launching its first phone in 2011. From there, Xiaomi expanded outward into the mid-tier and budget handset market, offering iPhone-like features, competitive technical specifications, and its own self-developed user experience for prices that were a lot more reasonable to consumers' pocketbooks.

From the Mi 1 in 2011, Xiaomi expanded outward to phones above and below the Mi 1—all with the same idea—to offer competitive specs, solid build quality, its own UI, all for something more reasonably priced than established brands like Apple, LG or Samsung.

Eventually, this ethos was expanded outward toward other tech devices, from tablets, smart watches, and televisions, but even now washing machines, vacuum cleaners and air conditioning units. 

And now, cars.

When taken in the context of how Xiaomi’s phone business achieved success, the SU7 (and now YU7) don’t really stray from the formula that made its handsets so popular: strong features in an attractive wrapper, sold for a reasonable price. 

I mean, you can tell just by looking at the chassis and platform that comprise its cars.

The SU7 and YU7 use the same self-developed Modena platform (an ambitious name if there ever was one), but from what I can see, to my untrained eye, Xiaomi isn’t exactly reinventing the wheel here.

Of course, there are some interesting design decisions and self-developed innovations, like the upside-down mounted battery cells that, in theory, would channel any thermal runaway event downward to the street, rather than upward toward the passengers. Yet, by and large, the Modena architecture looks like it simply takes top-of-the-line, modern design trends in car building, but ruthlessly optimized and streamlined to make it cheaper.

The SU7 and YU7 have megacasting with chassis pieces. Xiaomi calls it Hypercasting, Tesla calls it Gigacasting; it’s all basically the same concept, brand name be damned. The whole rear floor is megacast, while the front also has partially megacast pieces—all right in line with what we’ve seen from Honda, Tesla, Zeekr and possibly Toyota in the near future. 

Xiaomi says its rear crash bar and trunk portal can lop off crash damage in an accident, and allow for easier repair than a single-piece big design. The car is also a cell-to-body design, where the top of the battery’s case is actually part of the vehicle’s structure, rather than a box of cells bolted to the bottom of the vehicle. None of this is new tech—these are technologies that practically any manufacturer serious about making electric cars would implement.

But, in theory, Xiaomi’s trying to make them all a little cheaper and easier to make. For starters, Xiaomi is vertically integrated; aside from the battery cells, Brembo brake upgrade and air suspension units, there’s very little on the SU7 and YU7 that isn’t developed by the brand itself.

This approach, pioneered by Tesla, should keep the brand agile and speedy, shaving precious time and money spent that would have been tied up with negotiating and navigating with an automotive supplier. Even its electric motors are done in-house. That’s an edge over Western and other Asian automakers that depend heavily on vast networks of suppliers for nearly everything, and don’t get much in the way of speed and control.

The behind-the-scenes stuff is likely meaningless to the end consumer. To the average person, they just like the product and the branding. They're getting a good product, by a good brand, run by someone who is likable. It’s all reminiscent of the Steve Jobs-era Apple or Tesla in the earliest days, but arguably with a line of products that can reach a much, much wider subset of customers.

I don’t see Apple or Ford selling anything that approaches the utility of a $65 phone, that’s for sure.

Xiaomi YU7: Early Review And First Drive Impressions

I had less time behind the wheel of the YU7 than I would have liked. I rode in the YU7 as a passenger for about two hours on varying roads, but unfortunately, my time behind the wheel was limited to about 45 minutes on somewhat closed roads in a resort.

Still, this was more than enough to form an impression of the YU7. I drove the car in relatively slow neighborhood-style streets, but also a speedy and curvy mountain road that really let me conceptualize the car’s limits.

In short, the YU7 is fantastic; it’s very hard to believe that this is merely the brand’s second attempt at car making. Every EV I’ve driven from a startup has very obviously felt like it’s a first attempt at car building, with design decisions, materials and build quality that feel like a homespun concept kit car, rather than a series production car made by a large corporation. 

But I digress. There’s very little to fault with the Xiaomi YU7’s driving dynamics.

Like practically every EV on the planet, the YU7 is fast. Of course, it damn well should be, with a whopping 680 horsepower going to the ground via Xiaomi’s self-developed V6s electric motors. That alone is way more than your garden-variety Model Y.

However, the YU7’s chassis, ride and suspension are the real stars here. They all work together so well to make probably the most well-resolved Chinese car I’ve ever experienced. And this isn’t me putting a “good for a Chinese car” caveat, as if the brand isn’t up to par with Western brands.

No, this thing is a Porsche-killer. Seriously.

Xiaomi’s representatives said the biggest benchmarks for the YU7 were the Porsche Cayenne and Macan (both ICE and EV), as well as the Model Y, and it shows. The car is genuinely sharp to drive. Throw the YU7 into a corner at speed, and it corners remarkably flat, due in part to the car’s active pitch correction from its air suspension. The steering is light even in sports mode, but it’s very communicative.

The closest analogous feel I can think of in recent memory would be the gas-powered Acura Integra A-spec I had on loan in early 2023. I can’t think of any U.S.-market EV crossover that is as jovial and interesting to drive as this one, certainly not for the roughly $47,000 price tag.

The only real letdown is the relative lack of grip from the tester’s low-rolling resistance tires. This is easily remedied by simply choosing the optional Michelin Pilot Sports on one of its different wheel choices.

But like any well-tuned suspension setup, the YU7 can walk and chew gum at the same time. That active pitch control is used for other things, too. Like, smoothing out the jerky sensations of regenerative braking, or helping to predict and brace for road imperfections.

It’s a real cruiser. You can recline the rear seats (which allegedly recline more than a Maybach), and lie back and enjoy the YU7’s butter-smooth ride. I don’t think the Model Y rides anywhere nearly as well; the old one doesn’t, but I don’t have experience with the new Model Y Juniper.

I lamented giving the keys back to Xiaomi. I wanted more time with the car, because it was such a damn treat to drive. If the SU7 sedan drives as good as this, then I totally understand why it so terrified Ford CEO Jim Farley.

The YU7’s well-done driving dynamics are only part of the story here. The rest of the car is equally impressive; Xiaomi’s representatives insisted the YU7 is meant to be somewhat more of a premium product compared to the SU7 sedan. It’s kind of obvious when the two are compared.

It’s not like the SU7 is cheap and nasty, but there’s clearly a notable jump in interior luxury and quality between the two cars. The YU7 is whisper quiet thanks to double laminated glass, one of many features once only reserved for luxury cars. As in, zero-gravity seats for both driver and passenger. Every switch is well-weighted, and not a trim piece or panel on our cars was misaligned or bad to touch. By comparison, a similarly priced Tesla Model Y feels hard, cheap and nasty to the touch.

A Tesla also feels less clever. 

The YU7’s software and hardware suites share more in common with its phone lineup, rather than any car product. Like, there are all sorts of add-on accessories that can be purchased at the Xiaomi store. We’ve already talked about its add-on level of buttons for the infotainment screen, but Xiaomi’s figured out a way to continue to innovate here.

There are several points over the car’s interior, several of which are powered and capable of handling a number of accessories. Like a GoPro camera, or a phone holder with a built-in wireless charger. 

The car’s software is also crazy responsive. It’s got the full suite of common Chinese entertainment and navigation software, but it includes gems like built-in Apple Music. It even has wireless CarPlay, a feature that actually isn’t all that common in Chinese cars.

Most interestingly, the Xiaomi setup is capable of phone-style multitasking. Apple Music, Apple CarPlay or any other app can be docked while another app runs at the same time. So, if you’re into CarPlay but still want to use Xiaomi’s in-car navigation and assisted driving features, you can display them both at the same time on the same screen. 

It’s really, really well done and easy to navigate, even though all of the menus were in Chinese. An English-translated version would be a killer app.

Why Tesla Is Cooked In China, As A New EV Benchmark Emerges

The YU7’s goodness may not just be limited to China.

Xiaomi says that it wants to export cars outside of China starting in 2027, although it wouldn’t confirm if either the YU7 or the SU7 would be the models on sale. It may end up doing something else. Either way, exports to Western countries should make other automakers very nervous.

I knew a little about Xiaomi before I went to China, but I had a hard time understanding just how important this brand is in the minds of Chinese consumers. Whether it's national pride or just an array of good products, people simply like Xiaomi.

Our convoy of grey and green SU7s attracted the attention of passersby on the freeway and pedestrians alike. We attracted so much attention that amateur videos of our convoy driving out of Beijing made it onto Chinese social media. 

This type of fervor and admiration from the general public is more in line with a tech company, not a car company. I don’t know if any company in or out of China can match Xiaomi’s level of brand awareness and engagement. What’s scary to every other automaker is that Xiaomi can back up this level of fanaticism from its fans with a solid product. Xiaomi doesn’t need to convince anyone of anything in China. There’s a reason why the car essentially sold out until 2027 within an hour of reservations opening. 

Thus, this car is an existential threat to everyone, whether they’re in or out of China. How does any brand compete with such a big company with a built-in fanbase of loyal buyers, and the ability to build and scale lightning fast? Cars like the YU7 will only further contribute to accelerating China’s EV brand consolidation, as so many brands are now fighting for fewer buyers. Specifically, at least 240,000 fewer buyers. 

Including, or maybe especially, Tesla. While driving the YU7, I had a hard time understanding why buyers would choose any other car in the class, including the Tesla Model Y, which isn’t good news for Tesla. In theory, if there was any Western brand that could stem the tide of losses in China, it’d be that one. That isn’t quite what’s happening.

It’s true that Tesla’s global sales numbers have largely been buoyed lately by China. Elon Musk’s controversial meddling in world governments, as well as a stagnant model line and lackluster facelift of its most popular model, has seen its sales decrease globally.

China has been somewhat insulated from Musk’s antics, but sales of the Model 3 haven’t really recovered, especially when the SU7 came onto the Chinese market. The Model Y sells on incentives, like 0% financing and higher trade-in appraisals, tricks that have kept it on China’s top sales charts. 

But now, I’m not sure if this will continue. And in our trips to China, we’ve heard more than a few locals say the brand feels played out. Now, the YU7 is better than the Model Y in practically every conceivable way. If Tesla thinks that China will continue to buy its Model Y at the same rate, then they are delusional. The only real bottleneck is Xiaomi’s production capacity; if Xiaomi could make more YU7s and SU7s, consumers would likely buy more. The SU7 sedan still has a year-long wait list. 

If the YU7 breaks the containment of China, then automakers should be worried—especially if it matches the Model Y’s pricing outside of China. 

Contact the author: Kevin.Williams@InsideEVs.com