Between June 23 and 29, the Tesla China-made Model Y became the best-selling SUV once again, selling 15,210 units upfront within a single week. This milestone is evocative of Tesla continuing its stranglehold on the midsize luxury SUV sector in China, thanks to the revamped Juniper version launched earlier this year, with its enhanced design, rear-seat screen, and a CLTC range of as much as 719 km.
As a whole, June gave impressive results to the Tesla Shanghai plant: wholesale deliveries of Model 3 and Model Y increased to 71,599 units, with +0.8% compared with the previous year, putting an end to the eight months of declining indicators. Nevertheless, competition will be even more aggressive in the near future.
The Xiaomi YU7: A New Major Challenger
Right on the heels of Tesla is the YU7 Electric SUV by Xiaomi, which was released late June. It resonated right away with a base price of RMB 253,500 (= 35,360) or roughly 4% below that of the Model Y. In three minutes, 289,000 orders had been reported, and Xiaomi informed that it had received more than 200,000 orders in 3 minutes and locked-in orders totaling 240,000 in 18 hours.
This kind of demand worked wonders in boosting the share value of Xiaomi by ~8% on the Hong Kong markets, showing strong consumer enthusiasm.
Pricing is not the only thing that makes the YU7 attractive: its specs are also very exciting. The range between its base 96.3‑kWh LFP battery can reach up to 835 km CLTC, outperforming Tesla’s Model Y. It has common high-end driver-assistance functions (Xiaomi HAD) together with luxurious interiors such as Nappa leather and massage seats. The YU7 is constructed on the same platform (which was already used by the SU7 sedan) under the label of the “Modena” platform, and the SUV is now built as a true rival of Tesla.
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Yet sky-high demand has led to supply issues. Reports flag a 38–60 week delivery backlog, and hundreds of complaints emerged over the lengthy wait. Xiaomi claims limited ready-to-ship stock but is expanding its F2 plant in Beijing to alleviate shortages.
Tesla’s Response Strategy
Despite being in such intense competition, Tesla retains some important trump cards: brand awareness, a worldwide aftersales system, and state-of-the-art autonomy through Full Self-Driving. According to the analysts, Tesla might have to counter price reduction, benefits such as free FSD, and leasing programs to keep up with the rival. However, its new method of increasing the cost of the Model 3 long-range by 3.6% indicates a conservative policy even in the face of rivalry.
The market for NEV (new energy vehicles) in China is vibrant. Overall wholesale registrations jumped by nearly 30% year on year (c.29 percent) in June, with the overall surge led by BYD on its sales of 377,628, ahead of Tesla. Xiaomi is riding this wave: its SU7 sedan has been selling more than the Model 3 by Tesla every month since December, but perhaps the launch of the YU7 will trigger another competition.
Conclusion
Tesla Model Y is still the dominant force in the field of mid-size electrified sport-utility vehicles, at least at the moment. However, the most threatening challenge so far is Xiaomi YU7, which is priced low, is power-packed, and has been easily and quickly adopted by consumers. When Xiaomi increases its production and improves the problem with snags when it comes to delivery, the situation on the market may change dramatically.
The upcoming couple of months are a turning point as the YU7 stirred the attention of consumers, and Tesla revises its strategy. Will bigger domestics reduce the market share of Tesla, or will the brand and technological advantage support Tesla on the throne? Nonetheless, either in this way or another, the EV market in China will be tough competition.
