Xiaomi, a name synonymous with consumer electronics, has sent shockwaves through the automotive world as it achieved an astonishing feat by securing an overwhelming number of orders in a remarkably short timeframe.
Its new electric vehicle, hailed by some as a 'Tesla Killer' and priced competitively, has achieved an astonishing feat: securing an overwhelming number of orders in a remarkably short timeframe.
This remarkable debut has not only eclipsed its competitors but has also left the established auto industry in awe.
Unprecedented Demand
The overwhelmingly strong initial demand for Xiaomi's YU7 electric sport utility vehicle propelled the automotive newcomer's shares to an unprecedented high on Friday, sparking widespread debate that Tesla may need to adjust its pricing to compete effectively.
Within the initial 18 hours of the YU7's release, Xiaomi secured approximately 240,000 committed orders. These included significant upfront payments for vehicles ready for immediate delivery, as well as smaller deposits for those slated for future production.
Xiaomi's Disruptive Entry
The technology giant, primarily known for its smartphones and home appliances, made a significant entry into China's electric vehicle (EV) sector with the introduction of its inaugural vehicle, the SU7 sedan, in March of last year.
Since December, this car has consistently surpassed Tesla's Model 3 in monthly sales within China and even garnered high praise from Ford CEO Jim Farley.
Xiaomi Super Factory 🏭
— Luca Greco (@lucagrecoita) April 29, 2025
Looks familiar?
The Xiaomi SU7 is outselling the Tesla Model 3 in China and Xiaomi’s next model, the YU7, is a direct competitor to the Model Y.
For the YU7 Xiaomi is installing new 9,100t Giga Presses in addition to the 2 operational ones. pic.twitter.com/Ej2DoUWv5J
The YU7, only the company's second offering, enters the market starting at 253,500 yuan (£26014.35). This pricing positions it almost 4% below Tesla's Model Y, a move analysts believe will likely lead to further market share erosion for the American carmaker.
At a Xiaomi car showroom in Beijing, the YU7 drew a crowd of dozens. Among them was Otto Shi, a 26-year-old finance professional and current Tesla Model Y owner, who mentioned that 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 remarked, noting his admiration for Xiaomi's supply chain expertise. He added that the SU7's success convinced him that Xiaomi is the perfect Chinese brand to choose next.
Xiaomi's shares initially surged by 8% in early trading, reaching an unprecedented peak, though they later stabilised to close up 3.6%. Their value has climbed by over 70% throughout this year, pushing the company's valuation to approximately $190 billion (£139.78 billion) and making it the top-performing large-cap stock in the Asia Pacific region, according to LSEG data.
How Can Tesla Regain Ground?
As local competitors increasingly captivate Chinese buyers with innovative features, Tesla's presence in the Chinese electric vehicle market has notably diminished, shrinking from a high of 15% in 2020 to 10% last year and further to 7.6% during the initial five months of 2025, according to The Post.
According to a client note from Citi analysts, Tesla may need to implement additional price reductions, offer its 'Full Self-Driving' (FSD) driver assistance software at no charge, and introduce more attractive financing options to rival Xiaomi effectively.
Tesla, which counts China as its largest market based on first-quarter sales figures, has yet to issue a statement. Last year, the Chinese market accounted for approximately one-fifth of the company's total revenue.
A Feature-Packed Rival
While Xiaomi CEO Lei Jun heaped praise on Tesla's driving assistance software, he highlighted numerous other features where he claimed the YU7 surpassed the Model Y. The YU7's entry-level variant boasts a 96.3 kWh battery, enabling an impressive driving range of up to 835 km (519 miles) on a single charge and supporting rapid, high-power fast charging capabilities.
Everything you need, turned all the way up.
— Xiaomi (@Xiaomi) June 26, 2025
Delivers up to 835 km (CLTC) on a 96.3 kWh battery, and recharge 465 km in just 15 minutes. #XiaomiYU7 is ready. #NewBeginnings pic.twitter.com/vIBqw2Ei5O
This stands in contrast to the updated Tesla Model Y, which offers a maximum range of 719 km from a smaller 78.4 kWh battery. The top executive also noted that the YU7 includes storage drawers beneath its rear seats, and its driver assistance software is provided at no additional cost, whereas Tesla charges 64,000 yuan (£ 6,573.77) for its smart driving system.
Xiaomi just set a new benchmark in China’s EV market: the YU7 SUV launched today, racking up 200,000 pre-orders in just 3 minutes—shattering all previous car launch records.
— Bogdan Ceobanu (@studios) June 26, 2025
Features:
-$35,320
- 0–100 km/h sprint in 3.23 s
- top speed of 253 km/h
- 835 km (519 mi) CLTC range. pic.twitter.com/TzkSbXWYie
On Thursday evening, Xiaomi announced that the YU7 had garnered 289,000 orders in its inaugural hour of sales, a figure more than three times the initial demand experienced by its SU7 sedan at launch.
Battling the Scalpers
However, Lei acknowledged that a portion of these orders likely originated from scalpers, individuals who resell shares or tickets at a significant or quick profit. Indeed, on Friday, the Chinese second hand platform Xianyu saw hundreds of individuals attempting to sell their positions in the order queue. To counter this practice, Xiaomi has now implemented a cap, limiting each customer to a maximum of two vehicle purchases.
