Xiaomi has launched its second electric vehicle, the YU7 SUV, aimed at competing with Tesla’s Model Y in the Chinese market.

The YU7, revealed on Thursday, offers a driving range of up to 760 kilometers (472 miles) on a single charge.

This range exceeds the 719 kilometers advertised for Tesla’s extended-range Model Y.

Pricing for the YU7 will be announced during its official launch in July.

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🔗 Source: CNBC

🧠 Food for thought

1️⃣ China’s consumer preference shift powers domestic EV makers

China’s electric vehicle market shows significantly higher consumer enthusiasm than other regions, with 45% of Chinese consumers planning to buy battery electric vehicles as their next car, compared to just 23% in Europe and 12% in the U.S., according to McKinsey’s 2025 mobility survey 1.

The Chinese market is increasingly favoring local brands, with EVs now accounting for nearly half of all new car sales in China 2, creating a receptive environment for new entrants like Xiaomi.

Chinese consumers particularly value advanced features and performance in their EV purchases 2, areas where Xiaomi’s technology background gives it a competitive advantage against traditional automakers.

This consumer landscape has enabled Xiaomi’s SU7 sedan to quickly reach fourth place among China’s bestselling new energy vehicles in April, surpassing even Tesla’s Model Y which fell to eighth place.

2️⃣ Tech giants leveraging consumer electronics expertise in automotive

Xiaomi’s transformation from a smartphone company founded in 2010 3 to an EV manufacturer challenging Tesla demonstrates how tech companies can leverage their existing strengths when entering the automotive industry.

The company built its foundation through smartphones and IoT devices, establishing manufacturing expertise, supply chain relationships, and a strong brand that now supports its automotive ambitions.

Xiaomi’s rapid success with the SU7 sedan—delivering over 28,000 units in April—suggests that its consumer electronics approach to cars is resonating with buyers.

This tech-first approach differs from traditional automakers and mirrors the strategy of other Chinese companies that have successfully crossed industry boundaries, creating more dynamic competition in the EV space.

By emphasizing its strength in technology through features like superior range (760 km versus Tesla’s 719 km), Xiaomi is positioning its vehicles as technology products first and automobiles second—a differentiation strategy that appeals to tech-savvy Chinese consumers.

3️⃣ China’s EV market evolving beyond subsidies to competition-driven growth

China’s electric vehicle market has matured from being subsidy-dependent to competition-driven, with manufacturers now competing on features rather than just price.

The reduction of government subsidies previously caused financial challenges for EV makers like BYD, which saw a 31.6% decline in net profit in 2018 despite doubling EV sales 4.

Today’s market is increasingly driven by fierce competition on specifications like the driving range highlighted in Xiaomi’s YU7 announcement, indicating a market responding to consumer demands rather than government incentives.

The current competitive landscape, where Xiaomi can quickly gain market share against established players like Tesla, demonstrates how China’s EV market has become one of the world’s most dynamic and consumer-responsive automotive marketplaces.

Recent Xiaomi developments

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