Explosive demand for Xiaomi's new YU7 electric SUV pushed the company's stock to a record high on Friday (June 27), intensifying speculation that Tesla might need to cut prices to stay competitive. CEO Lei Jun revealed that the YU7 received 289,000 orders within the first hour of its release — nearly triple the initial figures for Xiaomi's SU7 electric sedan launched last March and far above analysts’ expectations of 100,000 orders. The YU7 is priced nearly 4% lower than Tesla’s Model Y, yet offers better features and performance, according to analysts.

Given the popularity of the YU7, experts predict Tesla’s Model Y — currently China’s top-selling SUV — will likely lose more market share. Tesla has already been struggling against domestic EV competitors who continue to gain traction with stylish new models. Xiaomi’s SU7, for instance, has consistently outsold Tesla’s Model 3 in China since December.

Priced from 253,500 yuan (S$45,091), the YU7 is seen as a strong alternative to the Model Y. Jefferies analysts pointed out that it delivers more value in terms of specs and performance. Analysts at Citi added that Tesla may need to lower prices further, provide its "Full Self-Driving" software for free, and enhance financing offers to compete effectively with Xiaomi.

Tesla has not commented on the matter. The company’s market share in China has slipped from 15% in 2020 to 10% in 2023, and further down to 7.6% in early 2025. Xiaomi’s stock surged 8% in early trading to reach an all-time high, before settling at a 3% gain. So far in 2025, its market value has tripled to nearly $200 billion, making it the top-performing large-cap stock in the Asia Pacific region, according to LSEG data.