Source: Xiaomi

Xiaomi's second vehicle, the YU7, made its highly anticipated debut at the company's 15th anniversary strategic product launch on May 22.

A Xiaomi store salesperson reported overwhelming interest in the upcoming YU7 model, stating they were busy handling inquiries until midnight the previous day.

Despite the vehicle not arriving in stores until July and only the SU7 being currently available, numerous eager customers have already visited dealerships hoping to see the new model.

Source: Xiaomi

CEO Lei Jun openly positioned the YU7 as a direct competitor to the Tesla Model Y, conducting detailed configuration comparisons and repeatedly asserting that the YU7 stands "several levels above" and holds "overwhelming superior" over Tesla's bestseller.

Lei Jun explained the rationale behind targeting the Model Y, noting that before the SU7's launch, the Model 3 had no serious competitors, let alone the Model Y which currently dominates global sales.

Tesla remains the undisputed leader in electric vehicles, with the Model Y maintaining its position as the world's best-selling vehicle in 2024 with 1.09 million units sold globally, including 480,300 in China. The closest competitor, BYD's Song Plus, sold 418,500 units but at significantly lower price points.

Xiaomi Auto, despite being a relative newcomer, has achieved remarkable success with its first model. The SU7 became an instant hit upon launch at the end of April 2024 and exceeded 20,000 monthly deliveries by October 2024.

Lei Jun also announced that cumulative deliveries have now exceeded 258,000 units, including over 28,000 delivered in April alone, making it the sales leader in the 200,000 RMB and above price segment.

On a cumulative retail (China only) sales since the SU7 began deliveries in April 2024, the SU7 exceeded Model 3 sales some time between December 2024 and January 2025.

By January, the SU7 delivered a total of 162,384 units, compared to 152,748 for the Model 3, just 9 months after start of SU7 deliveries.

As of April 2025, the SU7 has delivered a cumulative total of 243,941 units, exceeding the 206,204 units of Model 3 sold in China.

Having successfully challenged the Model 3 with its SU7 sedan, Xiaomi now sets its sights on the Model Y, as foreshadowed in January when Lei Jun responded to Tesla's promotional material about the refreshed Model Y “Juniper” with a simple but telling Weibo response "Good”.

Source: Weibo @雷军

The YU7 represents a comprehensive challenge to the Model Y across all key specifications. During the presentation, Xiaomi displayed direct comparisons between the two vehicles, with Lei Jun detailing advantages in range, battery capacity, acceleration, interior space, and charging efficiency.

The YU7 will be offered in three configurations: Standard, Pro, and Max versions, with the Standard featuring single-motor rear-wheel drive and the Pro and Max versions equipped with dual-motor all-wheel drive.

The Standard and Pro models utilize a 96.3 kWh lithium iron phosphate battery, delivering CLTC-rated ranges of 835 km and 770 km respectively, while the Max version employs a 101.7 kWh ternary lithium battery with a 760 km range.

Lei Jun emphasized that all YU7 models come standard with premium features including a panoramic display, lidar, adaptive damping suspension, and an 800V silicon carbide platform.

Pricing details remain undisclosed until the July launch event, though Lei Jun suggested the YU7's superior specifications would command a significant premium over the Model Y's 263,500 RMB starting price, likely exceeding 300,000 RMB.

This positions the YU7 differently from Xiaomi's SU7, which offered a more affordable entry-level option without advanced driver assistance systems.

Source: Xiaomi

The Chinese automotive market has seen numerous attempts to challenge the Model Y's dominance, with several 200,000 - 300,000 RMB SUVs launching in late 2024.

However, none have come close to matching Tesla's sales performance, including NIO’s Onvo L60, ZEEKR 7X, and Luxeed R7. Tesla's brand recognition and established reputation continue to make it the default choice for many first-time EV buyers, despite increasing competition.

Tesla faces its own challenges, with global deliveries declining 13% year-over-year in the first quarter of 2025, though Chinese sales actually increased 3.6% during the same period.

Source: Tesla

Tesla China has responded with aggressive financing incentives and the introduction of its Full Self-Driving technology in China, though adoption has been slow due to its 64,000 RMB price tag in a market where competitors often include similar features at no additional cost.

Analysts at Morgan Stanley view Xiaomi's entry into the automotive market as a significant development that is raising competitive standards.

Morgan Stanley's research suggests that Chinese manufacturers are winning the hardware race in electric vehicles, with the next battleground shifting to autonomous driving capabilities.

As the July launch approaches, the automotive industry awaits to see whether Xiaomi's YU7 can replicate the SU7's success and mount a serious challenge to the Model Y's market leadership.

The final pricing announcement will likely play a decisive role in determining its competitive position.