Tesla Model Y is already feeling the pressure of Xiaomi’s YU7

The Tesla Model Y has long been a dominant force in the EV world. It is the best-selling electric vehicle in the world, and it briefly became the best-selling car globally.

But it is being seriously challenged. In China, the Model Y is already feeling the impact of Xiaomi’s YU7.

Xiaomi wasn’t shy about positioning the YU7 against the Model Y when it unveiled the vehicle earlier this year.

The Chinese electronic giant turned EV manufacturer compared virtually every spec and price to Tesla’s best-selling EV, and it wasn’t surprising since the YU7 compares extremely favorably to Tesla’s refreshed Model Y.

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The company announced that it aims to outsell the Model Y, and it made a strong start with more than 200,000 pre-orders within minutes of unveiling the vehicle.

The impact of the YU7 has already been felt throughout the Chinese EV market, as many buyers are expected to wait more than a year for the vehicle due to the backlog of orders, and Xiaomi still needs to ramp up production.

Lei Jun, Xiaomi’s CEO, is so unworried about demand that he even recommended people order from competitors due to the size of the YU7 backlog.

Despite being only two months into the start of YU7 deliveries, the vehicle appears to already be putting pressure on the Model Y.

New insurance data shows Model Y versus YU7 deliveries over the last 3 months (via ThinkerCar):

The sheer volume of YU7 pre-orders disrupted the entire small EV SUV market in China, but it has settled back after it became clear that someone placing a new order wouldn’t get the vehicle until next year.

Nonetheless, as deliveries ramped up to over 3,000 units per week over the last two weeks, Tesla’s deliveries are going down and they are still far off their highs.

It is increasingly looking like the YU7 will have a similar impact on the Model Y as Xiaomi’s SU7 had on the Model 3.

Over the last year, the SU7, Xiaomi’s first EV, has been consistently outselling the Model 3. Earlier this month, there was hope that Model 3 was making a comeback, but it looks like it is already back to normal:

Tesla’s sales are down 6% year-to-date in China based on registration data.

Electrek’s Take

China is the most interesting EV market because it is by far the most competitive one. That’s because Chinese automakers are not penalized there like they are in other markets.

Furthermore, Tesla can’t complain since it basically got the same deal as Chinese automakers with its Gigafactory Shanghai in the free trade zone.

For the last 5 years, the American automaker enjoyed some dominance in the Chinese market, but now local companies have caught up and Xiaomi is one of the best examples.

The impact of the SU7 on Model 3 is undeniable.

It’s still early to see the impact of the YU7, but it appears to be happening already. It is also cannibalizing SU7 sales.

If this trend continues, it appears that YU7 will outsell Model Y by the end of the year – although I would expect Tesla to start cutting prices before then, likely with the new stripped-down Model Y, which should delay YU7 becoming the sales leader into next year.