Xiaomi aims to take on Tesla with cheaper YU7 electric SUV

Xiaomi has launched its YU7 SUV in China at a starting price of 253,500 yuan (US$35,322), which is 4% lower than Tesla’s Model Y priced at 263,500 yuan (US$36,762).

The YU7 offers a driving range of 835 kilometers per charge, significantly more than the Model Y’s 593 kilometers.

It features a preliminary self-driving system, a large multimedia screen, and a high-performance battery.

Deliveries will begin next week, earlier than the planned July timeline.

This launch aims to boost Xiaomi’s position in the premium EV market.

CEO Lei Jun said the company is targeting direct competition with the Model Y.

In May, presale inquiries for the YU7 surpassed those for Xiaomi’s first model, the SU7 sedan, which received over 70,000 orders in its first month after debuting in March 2024.

🔗 Source: South China Morning Post

🧠 Food for thought

1️⃣ Xiaomi’s rapid EV growth signals tech companies’ advantage in China’s crowded market

Xiaomi’s aggressive EV strategy comes after remarkable initial success with its first vehicle, the SU7 sedan, which secured over 258,000 sales since its March 2024 launch and 75,869 units in Q1 2025 alone 1.

The company has maintained momentum with seven consecutive months of delivering over 20,000 vehicles, despite facing production constraints that have extended delivery wait times to approximately 40 weeks 2.

This growth is particularly noteworthy in China’s saturated market with over 50 EV manufacturers, where only three companies (BYD, Li Auto, and Huawei-backed Aito) have achieved profitability.

Xiaomi’s smartphone-derived business model, leveraging existing distribution networks and focusing on aggressive pricing with technology integration, appears to be working, with the company’s EV division already reporting $2.5 billion in Q1 2025 revenue and improving gross margins of 23.2% 1.

The approach demonstrates how tech companies can potentially outmaneuver traditional automakers by prioritizing software integration and pricing strategies over automotive manufacturing heritage.