Xiaomi co-founder and CEO Lei Jun has officially entered the competitive electric vehicle (EV) market with the launch of the Xiaomi YU7 SUV launch, positioning the new model as a bold contender aimed directly at Tesla’s popular Model Y. Introduced at a high-profile event in Beijing on June 27, the YU7 immediately impressed investors and consumers alike. Xiaomi’s shares on the Hong Kong Stock Exchange surged by up to 8% following the launch, before stabilizing with a 3.3% gain. This rally adds to the company’s more than 70% stock increase so far in 2025.
The most notable highlight of the Xiaomi YU7 SUV launch is its impressive ultra-long range up to 835 kilometers on a single charge, significantly outpacing the Tesla Model Y’s 593 kilometers. Starting at 253,500 yuan ($35,366), it also undercuts Tesla’s pricing by about 10,000 yuan, making it a more accessible option for Chinese consumers. With pre-orders reaching 289,000 units within an hour of launch, industry experts are calling the response “almost unprecedented” in China’s auto sector.
Lei Jun Directly Challenges Tesla’s Market Dominance
Lei Jun has not shied away from positioning the YU7 as a direct rival to Tesla’s dominance in China. During the unveiling, he made multiple comparisons to the Model Y, which was China’s best-selling SUV in 2024 with over 480,000 units sold. “We will face our strongest competitor directly, and the most brutal competition directly,” Lei declared confidently at the launch.
The YU7 is available in three variants, including two high-performance models: the YU7 Pro priced from 279,900 yuan and the YU7 Max starting at 329,900 yuan. Both offer faster acceleration and upgraded features. Deliveries are expected to begin in July, and analysts project Xiaomi may deliver up to 100,000 YU7s by the end of the year. Combined with its SU7 electric sedan released in 2024, Xiaomi is poised to exceed its 2025 goal of delivering 350,000 vehicles, potentially reaching 400,000 units.
Deutsche Bank analysts emphasized that the Xiaomi YU7 SUV launch could significantly impact Tesla’s sales in China during the latter half of the year, especially if Xiaomi successfully scales its production.
Rebound from Crisis and Regulatory Challenges
Xiaomi’s EV push comes on the heels of a serious challenge earlier this year. In March, a fatal crash involving a Xiaomi vehicle in self-driving mode resulted in three deaths, triggering a sharp stock decline in April. Although the company was not officially penalized, the incident intensified regulatory scrutiny on the EV industry.
Chinese authorities have since implemented tighter restrictions on how carmakers advertise autonomous features. Terms like “smart driving” and “autonomous driving” are now banned in marketing materials. Companies are also required to obtain official approval and conduct extensive testing before issuing software updates for sold vehicles.
Despite this setback, the Xiaomi YU7 SUV launch demonstrates the brand’s resilience and growing ambitions in the EV space. With record-breaking pre-orders and a confident strategy from Lei Jun, Xiaomi is shaping up to be a serious competitor to Tesla in China’s evolving automotive landscape.
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