Xiaomi YU7 SUV, company's second EV, receives 240000 orders in 18 hours; challenges Tesla in China

Xiaomi's latest electric SUV, the YU7, has triggered a buying frenzy in China, racking up around 240,000 orders within just 18 hours of launch, a performance that sent the company’s shares soaring to a record high on Friday.

The orders, considered firm by Xiaomi, include both large deposits for vehicles ready for delivery and smaller sums for those yet to be produced. The overwhelming demand underlines the smartphone giant’s growing foothold in the electric vehicle (EV) sector, as it intensifies competition with established players like Tesla.

This marks Xiaomi’s second foray into the EV market, following the successful debut of its SU7 sedan in March last year.

Priced from 253,500 yuan (approximately $35360), the YU7 undercuts Tesla’s Model Y by nearly four per cent, further fuelling speculation that the US automaker may need to respond with price cuts or new incentives to maintain its market share.

“Tesla may be forced to reduce prices further or consider bundling its Full Self-Driving (FSD) system for free to stay competitive,” said Citi analysts in a client note.

The YU7’s specifications are also attracting attention. Its standard model includes a substantial 96.3 kWh battery pack offering a claimed range of up to 835 kilometres (519 miles) on a single charge, significantly more than the 719-kilometre range of the redesigned Tesla Model Y, which has a smaller 78.4 kWh battery. The YU7 also offers rapid charging capabilities and a number of consumer-focused features, including under-seat storage drawers and free driver-assistance software, a feature that costs an additional 64,000 yuan on Tesla’s models.

While acknowledging Tesla’s superiority in autonomous driving, Xiaomi CEO Lei Jun argued that the YU7 surpasses the Model Y in several other areas. “We are offering more value where it counts for Chinese drivers,” he said at the launch event.

The company claimed 289,000 YU7 orders were logged within the first hour of sales on Thursday night, over three times the figure achieved by the SU7 at its debut. However, Lei cautioned that some of these may come from scalpers attempting to resell their early positions in the queue. Hundreds of listings offering order slots were spotted on the secondhand trading platform Xianyu.

In response, Xiaomi has implemented a two-vehicle purchase cap per customer to deter scalping and ensure fairer distribution.

(With inputs from Reuters)