As Tesla’s grip on the electric vehicle market loosens, a fresh competitor is stepping up to snag a significant share of the pie.
What’s Going On?
This year, Xiaomi, the well-known Chinese tech giant, has dived into the EV scene by launching its SU7 sedan. According to The Motley Fool, Xiaomi’s foray into eco-friendly vehicles couldn’t have gone much better in its inaugural year.
Just months after its December release, the SU7 toppled Tesla’s Model 3 in sales. Riding on that success, Xiaomi rolled out its YU7 SUV in the summer of 2025, aiming directly at Tesla’s Model Y.
The YU7 boasts an impressive 70-mile longer driving range than its Tesla counterpart and is about $1,400 cheaper for the base model.
These selling points appear to hit home – within just 18 hours of its official announcement, Xiaomi had nearly 250,000 orders for the YU7.
Why This Matters
China holds the title of the world’s largest electric vehicle market, and not too long ago, Tesla vehicles made up 16% of all EV sales. However, fierce competition from players like Xiaomi and BYD, combined with Tesla’s shift in focus towards automotive technology and energy storage, saw the brand’s market share plummet to just 4.4% by this August, based on reports from The Motley Fool.
This decline isn’t isolated to China. Tesla has faced stumbling blocks across various global markets as well.
Despite hitting a record delivery count in Q3 2025, likely influenced by consumers racing to secure their cars before the expiration of federal EV tax credits in the U.S., the company nonetheless experienced a drop in overall EV sales and profits this year.
Certainly, despite previous assurances from CEO Elon Musk regarding new vehicle models, the current trend shows the company rolling out more affordable, minimalist variants of its well-established models.
What’s Next for Tesla?
In past instances when Tesla’s sales figures took a hit, it usually signaled a downturn for the entire EV market, but that’s not the case today.
Remarkably, electric vehicle sales are booming as more consumers opt for cleaner cars instead of traditional gas-powered ones.
Even without the $7,500 federal tax credit, auto manufacturers continue to promote deals and incentives that can provide significant savings for buyers.
Considering this landscape, Tesla might need to pivot its strategy towards developing its anticipated more affordable models if it hopes to reclaim its spot at the top of the EV market.
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This article about Xiaomi’s rapid success as a surprising contender against Tesla was originally published by The Cool Down.
