Is Xiaomi Set to Dethrone Tesla in China

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Looking at the best selling electric cars in China across the first 11 months of 2024, the Tesla Model Y was the top selling full electric car, and the Tesla Model 3 was the 8th best selling pure electric car. BYD has dominated plugin vehicle sales and pure electric vehicle sales in China, but it has approximately a million models. Tesla has just two in China, and as the second most desired — or at least most bought — EV brand in the country, the models do exceptionally well there. However, the market is the most competitive, sees the most innovation, and is changing the most rapidly of any major auto markets in the world.

The hottest new brand on the EV market in China is Xiaomi, the second largest smartphone producer in the world. I’ve written about its amazing EV rise a handful of times, so if you missed those, just go ahead and catch up here:

The latest news on Xiaomi is that its sedan, its first and currently only model, the SU7, is now outselling the Tesla Model 3 there. Here’s a chart from CnEVPost on this:

The brand is extremely strong in China, and its EV arrival has been beyond impressive. It’s the biggest launch I remember since the Tesla Model 3 or Model Y.

Xiaomi EV vice president Li Xiaoshuang recently shared on social media that the SU7 was doing better than the Model 3 in China already.

While by itself this is an interesting achievement and noteworthy for the company, it could say something more important about what’s to come.

As noted above, the Model 3 is the 8th best selling pure electric vehicle in China, while the Model Y is #1. Xiaomi’s next model is the YU7, a crossover. In other words, the Model Y competitor is on the way. It’s expected to arrive in June or July of this year. Once the Xiaomi is here and production ramps up, will it surpass the Tesla Model Y just like the SU7 has surpassed the Model 3? And if it does so, does that mean it will become the best selling pure EV in the country? (Or will BYD perhaps take the spot back?)

Also, aside from bragging rights and sports-like sales rankings, the bigger implication may be what the YU7 does to Tesla Model Y consumer demand. Will it steal a considerable number of customers from Tesla? Tesla relies on the sales of just two models. If one model starts doing worse, it doesn’t have a huge lineup of other models that could fill in the gaps (like BYD does). And the Chinese market is absolutely critical for Tesla. Could Xiaomi and its YU7 and SU7 do real damage to Tesla in China? We’ll have to wait to see, but it’s a possibility I’m certainly keeping an eye on.

Tesla’s solution for now might be the brand new refresh of the Model Y. Perhaps that will hold of the dogs for a while. Perhaps it will allow the Model Y to retain its #1 position in 2025. We shall see.

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