The YU7 is Xiaomi's second car since the Beijing-based firm entered the auto sector last year with its sporty electric SU7 sedan, which drew styling cues from Porsche and was priced below Tesla's Model 3. Since December, the SU7 has outsold Tesla's Model 3 in China on a monthly basis.

As domestic rivals increasingly win over Chinese consumers with snazzy new features, Tesla’s share of the Chinese EV market has fallen from a peak of 15 per cent in 2020 to 10 per cent last year and then again to 7.6 per cent for the first five months of 2025.