Xiaomi Overtakes Tesla in China’s EV Market with SU7
Xiaomi is rapidly emerging as a formidable competitor in China’s electric vehicle (EV) market, outpacing Tesla in sales and preparing for a significant global expansion. The latest sales data, spanning from April 2024 to the end of January 2025, reveals that Xiaomi’s SU7 model has outsold Tesla’s Model 3 in China by approximately 10,000 units. This milestone is particularly impressive given that the SU7 is Xiaomi’s debut vehicle, marking a remarkable entry into the EV sector.
Xiaomi’s Rapid Rise in the EV Market
Xiaomi, a company historically known for its smartphones and consumer electronics, has managed to establish itself as a major player in the Chinese EV market within just a year of launching its first vehicle. The SU7’s combination of cutting-edge technology, affordability, and brand recognition has contributed to its overwhelming success. Sales figures indicate that Xiaomi sold 22,897 units of the SU7 in January 2025 alone, whereas Tesla’s Model 3 saw only 8,009 units sold during the same period, according to Tesla delivery tracker Troy Teslike.
Tesla, once the dominant force in China’s EV market, now finds itself losing ground to domestic competitors. While Tesla was the first foreign car manufacturer to own a fully independent factory in China, its early advantage appears to be diminishing. Historically, foreign automakers were required to form joint ventures with Chinese firms, sharing technology and profits. However, Tesla was granted an exception, which allowed it to establish its Shanghai Gigafactory without a local partner. This move initially gave the company a strong foothold, but recent sales trends suggest that consumer preferences are shifting toward homegrown brands like Xiaomi and BYD.
The Decline of Tesla’s Model 3 in China
Once considered one of the most desirable EVs in China, the Tesla Model 3 is now witnessing a significant decline in sales. Despite Tesla’s reputation for innovation and strong branding, the Model 3 has struggled to maintain its dominance. Recent reports from Teslarati indicate that overall Tesla sales in China fell by a staggering 51.47% in January 2025, even after the company launched a revamped Model Y in the market.
The decline in Model 3 sales contrasts sharply with the continued success of the Model Y. While the Model 3 is losing ground, the Model Y was the second-best-selling vehicle in China at the end of 2024, only slightly behind the more budget-friendly BYD Seagull. Nevertheless, the drop in Model 3 sales is a concerning trend for Tesla, especially as Xiaomi prepares to expand its presence in the global EV market.
Xiaomi’s Ambitious Plans for Expansion
Xiaomi is not resting on its laurels. The company is gearing up for full-scale production of its second EV, the YU7 SUV, which is expected to be a direct competitor to Tesla’s Model Y. The YU7 is designed to challenge not only Tesla but also luxury automakers such as Mercedes-Benz, BMW, and Porsche. With a competitive pricing strategy, advanced technology, and the backing of Xiaomi’s established brand, the YU7 has the potential to disrupt the premium EV segment.
Xiaomi’s long-term strategy includes expanding beyond China and entering international markets. The company’s leadership has hinted at global ambitions, aiming to take on Tesla and other EV giants in North America, Europe, and other key regions. If Xiaomi successfully executes its expansion plans, it could pose a serious threat to traditional automakers and reshape the EV landscape on a global scale.
The Future of Tesla in China
Tesla’s challenges in China are not solely due to increasing competition from Xiaomi. The broader market dynamics, changing consumer preferences, and local government policies favoring domestic brands have all contributed to Tesla’s struggles. In recent years, Chinese consumers have shown a growing preference for homegrown EV brands that offer similar or superior technology at more competitive prices.
Tesla’s response to this trend has been mixed. While the company continues to invest in research and development, its pricing strategy and market positioning may need to be reevaluated. The introduction of a more affordable Tesla model could help the company regain some lost market share, but it remains to be seen whether such a move would be enough to counter Xiaomi’s momentum.
Conclusion
Xiaomi’s entry into the EV industry has been nothing short of extraordinary. With its SU7 already outperforming Tesla’s Model 3 in China and the upcoming YU7 SUV set to rival the Model Y and other luxury EVs, Xiaomi is quickly establishing itself as a dominant force in the market. If the company’s ambitious expansion plans materialize, it could pose a significant challenge to Tesla and other established automakers worldwide.
For Tesla, the road ahead in China appears increasingly difficult. With sales declining and new competitors gaining traction, the company will need to adapt its strategy to maintain its position in the world’s largest EV market. Whether Tesla can reclaim its dominance or Xiaomi will continue its rapid ascent remains to be seen, but one thing is clear: the battle for EV supremacy in China is heating up.
