Tesla Model Y Faces Major China Challenge

Cars and Drivers

Published: May 23, 2025 9:15 am

The Model Y is Tesla Inc.’s (NASDAQ: TSLA) best-selling vehicle. Its U.S. base price of $44,990 makes it affordable compared to many other electric vehicles (EVs). The latest version is not available in the United States yet. However, it should win Tesla customers elsewhere, both those who own the Model Y now and those who might buy one. China’s Xiaomi, a large consumer products company, has introduced a direct competitor. Its new YU7 may even best some of the Model Y’s key features. And it will challenge Tesla in China, the world’s largest EV market.

24/7 Wall St. Key Points:

Xiaomi has introduced a competitor to Tesla Inc.’s (NASDAQ: TSLA) best-selling Model Y.
The SUV will challenge Tesla in China in particular.
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Xiaomi says the YU7 has a range of 518 miles, which is extraordinary for an EV. The SUV is fast, with a zero-to-60 MPH time of just above three seconds. It has not been priced yet, but many Chinese EVs are priced below their competition. It also has what the company says are advanced self-driving features.

One hurdle Xiaomi has to clear is that its SU7 sedan was involved in a crash two months ago that killed three people. It is a significant blemish on Xiaomi’s safety record.

The latest Model Y is a significant improvement over the version it replaces. It is long-range all-wheel drive and can travel 341 miles on a single charge. According to CNN, its zero-to-60 MPH time is 4.3 seconds. In the first quarter of this year, the Model Y was the best-selling EV model in the United States, selling 64,051 units. The Tesla Model 3 was in second place, selling 52,520 units. The Mustang Mach-E was a distant third with sales of 11,607. TopGear says the Model Y is the world’s best-selling EV. It is not certain that is true in China, where manufacturers may not give accurate numbers.

The YU7 will not compete with Tesla in the U.S. because of 100% tariffs on Chinese EVs. Chinese EV tariffs have begun to fall in parts of Europe. Of course, Tesla and Xiaomi have gone head-to-head in China already. Tesla already has competition in the country, led by EV giant BYD, which recently moved ahead of Tesla in EU sales in April.

Tesla in Trouble

Tesla’s sales around the world are already in trouble. The theory is that this is true because of founder Elon Musk’s relationship with President Trump and his role in cutting federal government expenses. Musk has returned to Tesla as an active CEO. He may engineer a turnaround, but significant bets are against that.

Many Tesla bulls believe Tesla’s big win will be a lead in self-driving technology. In the meantime, Chinese EV companies continue to hit it with models meant to take away its market share in the countries where they can sell cars.

Prediction: 1 Electric Vehicle Stock Poised to Overtake Tesla by 2030

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