Tesla's Model Y, long dominant in the electric vehicle market, is facing significant new competition in China from the Xiaomi YU7, according to a report from US automotive website Electrek. The Model Y, which has reigned as the world's best-selling EV and occasionally the best-selling car globally, is now experiencing a serious challenge in one of its key markets.

When Xiaomi launched the YU7 earlier this year, the company deliberately positioned it as a direct competitor to the Model Y, comparing specifications and pricing head-to-head with Tesla's offering. This strategic move makes sense given the YU7's apparent advantages over the upgraded Model Y. Xiaomi's ambitious goal to surpass Model Y sales got off to a remarkable start, with pre-orders exceeding 200,000 units within minutes of becoming available.

The impact of the Xiaomi YU7 is now reverberating throughout China's EV market. Demand has been so overwhelming that Xiaomi CEO Lei Jun has actually suggested consumers consider purchasing vehicles from competitors due to extended wait times.

Despite deliveries of the Xiaomi YU7 only beginning two months ago, the model is already exerting noticeable pressure on the Tesla Model Y.

YU7 Sales Rise as Model Y Declines

According to the latest insurance registration data from automotive consultancy ThinkerCar, weekly deliveries of the Xiaomi YU7 in China have climbed to over 3,000 units over the past two weeks. During the same period, Tesla Model Y deliveries have declined, remaining well below their previous peak levels.

If this trend continues, Xiaomi YU7 sales could overtake the Model Y by year-end. However, Tesla may respond by reducing prices and is likely to introduce a more affordable, streamlined version of the Model Y to counter this challenge.

The competition extends beyond SUVs, as the Xiaomi YU7 sedan appears to be similarly affecting Tesla Model 3 sales. Over the past year, YU7 sales have generally outperformed the Model 3. While the Model 3 briefly surpassed the YU7 in weekly sales earlier this month, the YU7 has since reclaimed its leading position.

Registration data indicates that Tesla's year-to-date sales in China have fallen 6% compared to the same period last year, highlighting the growing competitive pressure in this crucial market.

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