Copyright © BusinessAMBE 2023

Key takeaways

  • Xiaomi's YU7 electric SUV sold better than Tesla's Model Y in January, becoming the best-selling vehicle in China.
  • Xiaomi's strategic pricing and emphasis on performance helped the company capture a significant share of the Chinese EV market.
  • Despite that victory, Tesla remains the global leader in electric vehicles.

In January, Xiaomi's electric SUV, the YU7, reached a major milestone by becoming the best-selling vehicle in China, surpassing Tesla's Model Y. Data from the China Passenger Car Association showed that Xiaomi sold 37,869 YU7 units, double the number of Model Ys sold (16,845).

That success marked a remarkable shift in the Chinese electric vehicle market, with the Model Y, which was still the best-selling car in December, plummeting to 20th overall and 7th among new green vehicles.

The strategic entry of Xiaomi

Xiaomi's ambitious entry into the electric car market began about six months ago with the launch of the YU7. The company, known for its smartphones, strategically positioned the YU7 below the price of the Model Y, aiming to capture a significant share of the market. Xiaomi also stiffened attention the YU7's superior performance in terms of range on a single charge compared to Tesla's offerings.

Analysts had already expected that the YU7 had the potential to challenge the Model Y's dominance in China. Although monthly sales figures can fluctuate, the YU7's success in January indicates a possible turning point. Previously, the Model Y consistently outperformed other electric vehicles, but Xiaomi's aggressive pricing and emphasis on performance seems to be catching on with Chinese consumers.

Tesla remains a global competitor

Despite the YU7's impressive debut, it is important to realise that Tesla remains a strong competitor in the global electric vehicle market. If we exclude petrol vehicles, for example, Tesla ranked fifth in China's sales figures in 2025, while Xiaomi was 10th. BYD emerged as the leader with more than three million vehicles sold, followed by Geely with 2.6 million.

Xiaomi's success comes amid a recent slowdown in China's electric car market. The company is also facing safety challenges related to its earlier SU7 sedan model. Fatal accidents involving driver-assist systems and electric door handles have led to stricter regulations and changes across the industry. As Xiaomi pursues expansion into Europe next year, it will need to address these safety concerns while capitalising on the momentum created by the YU7's strong performance.

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