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Bumper orders for Xiaomi's new SUV heighten threat to Tesla

Published: 27 Jun. 2025, 16:25

People look at the new electric YU7 SUV displayed at a Xiaomi store in Beijing on May 29. [REUTERS/YONHAP]

Exceptionally strong initial orders for Xiaomi's YU7 electric SUV sent shares of the automotive newcomer to a record high on Friday and fanned speculation that Tesla may have to cut prices to fight back.

The company received 289,000 orders for the YU7 - only its second vehicle and one that undercuts Tesla's Model Y in price by nearly 4 percent - in its first hour on sale, according to CEO Lei Jun.

That was more than three times the level for its SU7 electric sedan launched in March last year and easily exceeded market expectations of around 100,000 in orders.

Tesla's Model Y, China's best-selling SUV, will likely lose more market share, analysts said.

That would only rub salt into the wound for the U.S. automaker, which has steadily lost ground to domestic EV makers that have won over consumers with snazzy new models. Xiaomi's SU7, for example, has outsold Tesla's Model 3 in China every month since December.

The YU7 is priced from 253,500 yuan ($35,360), "slightly below that of Tesla's Model Y, but it offers much better specs and performance," said analysts at Jefferies.

Citi analysts said Tesla may have to cut prices further, offer its "Full Self-Driving" driver assistance software for free and offer more financing incentives if it is to successfully compete with Xiaomi.

Tesla did not immediately respond to a request for comment.

Its share of the Chinese EV market has fallen from a peak of 15 percent in 2020 to 10 percent last year and then again to 7.6 percent for the first months of 2025.

Xiaomi's shares shot up 8 percent in early trading to an all-time high but later pared gains to be up 3 percent. They have more than tripled this year to bring the value of the smartphone and appliance maker to nearly $200 billion, making the company the best-performing large-cap stock in Asia Pacific, according to LSEG data.

Reuters