Less than a year after launching its first electric sedan, smartphone and electronics maker Xiaomi has officially launched a crossover SUV that aims to challenge Tesla’s best-selling Model Y.

Xiaomi launched the SU7 sedan last year, and it has been outselling Tesla’s Model 3 in mainland China since December.

At a launch event in Beijing for the new YU7 SUV, Xiaomi chief executive Lei Jun said the model was “comparable to the Model Y” and would go on the market in July.

Driving range

The YU7 has a driving range of up to 835km for the basic edition, Xiaomi claimed, which would compare favourably to the Model Y.

Citi analysts said in a note that they believe the vehicle will “significantly erode” Model Y market share in China.

The YU7’s pricing is to be announced when it goes on sale in July.

Xiaomi launched its first car into a crowded market, with dozens of domestic Chinese EV makers competing for market share, but the vehicle was a surprise success after attracting consumers with its design, technology and relatively low price compared to Tesla’s Model 3.

Xiaomi has been expanding its Beijing car manufacturing operations, but company representatives told the South China Morning Post in April that YU7 buyers would have to wait several months for the vehicle to be delivered due to a production shortage.

Tesla’s Model Y was the best-selling vehicle of any kind around the world last year, including mainland China, where it sold 480,000 Model Ys in 2024.

But the company has seen sales drop sharply in recent months, and figures compiled by Reuters earlier this month suggested a revamped version of the compact SUV was seeing sluggish demand.

Tesla challenger

In China, Tesla has led the premium EV market since 2020, but began losing market share to BYD, the world’s biggest EV assembler, and Xiaomi last year amidst an ongoing price war.

In April Tesla’s sales of the Model 3 dropped 66.3 percent from the previous month to 8,747 units, compared to deliveries of more than 28,000 SU7s for the same period, according to local media reports.

Deliveries from Tesla’s Shanghai factory, including domestic Chinese sales and exports, slumped to their lowest level in three years in the first quarter, down 22 percent year-on-year to 172,754 units.