Xiaomi reportedly received nearly 300,000 orders in one hour for its new YU7 electric SUV

Xiaomi has thrown down the gauntlet with its latest product debut in the electric vehicle industry. On Thursday, the company revealed that it had received nearly 300,000 orders for its new YU7 electric SUV within just one hour of its launch. 

Xiaomi’s success with the SU7 and the ongoing explosive response to the YU7 seem to spell bad news for Tesla’s sales in Asia’s largest economy.

“We will not accept defeat,” Lei Jun, Xiaomi’s CEO, said during the YU7 launch. “We’re officially taking up Tesla’s long-standing challenge to compare products head-to-head.”

The vehicle is currently priced at around $35,000, significantly less expensive than Tesla’s Model Y, which starts at $36,760.

Xiaomi receives 300,000 YU7 orders on launch day

Xiaomi’s SUV isn’t just a cheaper alternative to the Model Y. Analysts have praised the vehicle’s strong specs and stated that its local brand power and integration with Xiaomi’s digital ecosystem make it uniquely positioned to disrupt the current market dynamic.

“The new Xiaomi is probably Tesla’s largest threat so far, not only in China but globally. It’s very competitive and appealing,” Felipe Muoz, the global analyst at JATO Dynamics, said in a statement to Business Insider.

According to Bill Russo, the CEO of the Shanghai-based consultancy Automobility, Xiaomi isn’t just selling cars.

“They’re not just an EV company,” Russo told Bloomberg TV. “They’re creating a fully integrated digital ecosystem… which resonates very, very well in China, the world’s biggest digital economy.”

The firm’s “smartphone mindset” positions these vehicles as extensions of the tech products Xiaomi users already know. With over 600 million Xiaomi smart devices currently in use around the globe, the company has a unique advantage in syncing its car offerings with its other consumer electronics.

“They recognize this opportunity, they entered it, and in one year with one model, they’re outselling Tesla in China,” Russo added.

The first model of the electronic vehicle, the SU7 launched in 2024, and was widely praised. Ford’s CEO described it as “fantastic,” and Business Insider reported that it “shouldn’t drive this well given it’s from a company that had not produced vehicles before.”

Tesla endures sales drops across different markets

Xiaomi’s YU7 launch coincides with Tesla’s ongoing rough patch in the Chinese market. Between January and May of 2025, Tesla’s battery electric vehicle sales in the country dropped a staggering 18% year-over-year, according to a Shanghai-based automotive consultancy called ThinkerCar.

Meanwhile, Xiaomi’s stock is up 72% year-to-date. BYD also recorded 894,000 EV sales globally during the same period, compared to Tesla’s 603,000. The 291,000 sales deficit is quite significant, as both companies had been in a neck-and-neck global EV race.

BYD also overtook Tesla in global revenue in 2024, pulling in $107B, surpassing Tesla’s $97.7B. In April 2025, BYD outsold Tesla in Europe for the first time, with 7,230 battery-electric vehicles sold while Tesla recorded 7,165 sold, according to data compiled by JATO Dynamics.

Analyst Felipe Muoz noted that Tesla’s older car models, especially the Model Y, is part of the company’s problem.

“It’s about time to get an all-new generation,” Muoz said. “But based on Tesla’s strategy with other models, it doesn’t seem like an all-new Model Y is coming anytime soon.”

“The YU7 is one of many strong new entrants, but it won’t mean the defeat of Tesla,” he said. “It will complicate life, but Tesla has already built a reputation for excellent EVs and is a pioneer in the EV industry.”

He added that while Tesla still leads on battery specs and software in the U.S. and Europe, it is losing ground fast in China. Russo also suggested that Tesla’s software lead is no longer enough in China.

Several media outlets also reported on Thursday that Omead Afshar, Tesla’s VP of Manufacturing and a longtime Elon Musk ally, left the company. Prior to Afshar’s exit, the company also lost another talent as Milan Kovac, who led Tesla’s Optimus humanoid robot project, left.

“The dismissal of Afshar is part of the game and Tesla’s response to the increasing challenges in China, considering that it can’t react fast from a product point of view,” Muoz commented. “The Model Y is still one of China’s top sellers, but it is not alone anymore.”

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