Xiaomi's new SUV racks up massive orders, turning up heat on Tesla
Exceptionally strong initial orders for Xiaomi's YU7
electric sport utility vehicle
sent shares in 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% - 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 on a monthly basis since December.
The YU7 is priced from 253,500 yuan ($35,360) which is "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% in 2020 to 10% last year and then again to 7.6% for the first months of 2025.
Xiaomi's shares shot 8% higher in early trade to an all-time high but later pared gains to be up 3%. They have more than tripled this year to value the smartphone and appliance maker at nearly $200 billion, making the company the best performing large cap stock in Asia Pacific, according to LSEG data.
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