Xiaomi's new SU7, forcing Tesla into a corner

Ask AI · Why is Tesla so nervous about Xiaomi SU7?

21st Century Business Herald Reporter Yi Silin

On March 19, at the headquarters of Seres in Chongqing, 1700 kilometers away from Beijing, colleagues from marketing, vehicle departments, and other related teams did not leave after work, but organized a viewing event for the launch of the new generation SU7 together.

The new generation SU7 and the main SUV model, Wenjie, do not have overlapping user groups, nor are they direct competitors. “As long as it’s a Xiaomi product, we will follow up,” a Wenjie insider told 21st Century Business Herald. They mainly learn from Xiaomi how to do sales rights and compare product value.

Compared to Wenjie, Tesla views the new generation SU7 as its top competitor. Recently, 21st Century Business Herald visited multiple Tesla stores and found that on the third day after the new generation SU7’s launch, Tesla had already prepared a detailed competitor comparison document covering financial policies and product highlights, while other models in the same price range did not receive this treatment.

Tesla’s direct store sales told us that even before the new generation SU7 was launched, many users had come in to compare it with Model 3. “Among customers who come in to see Tesla, more than half are comparing Model 3 with SU7. We can’t ignore this car.”

Targeting the new generation SU7, Tesla sales are firing on all cylinders

For Tesla sales to successfully secure Model 3 orders, the new generation SU7 has become an unavoidable competitor.

“Our standard version is aimed at Tesla Model 3, with 90% of the specs exceeding Tesla’s, parameter comparison, Xiaomi is very confident,” said Lei Jun, Xiaomi Group Chairman, at the launch event.

And this is indeed the case. The new generation SU7 offers three versions: rear-wheel drive standard, rear-wheel drive Pro, and all-wheel drive Max, priced at 219.9k yuan, 249.9k yuan, and 303.9k yuan respectively, with CLTC ranges of 720 km, 902 km, and 835 km.

Just comparing the pricing and range of each version, Tesla Model 3 does not have an advantage. Tesla’s salespeople are well aware of this. During store visits, many Tesla salespeople told 21st Century Business Herald that when introducing to customers, they avoided discussing the prices and ranges of the two models, instead emphasizing Tesla’s advantages in financial policies, after-sales, and energy consumption.

For example, regarding financial policies, Xiaomi’s new generation SU7 offers three main financing options: 1. five-year installment plan with an annualized rate of 2.5%; 2. seven-year low-down payment plan with a down payment of 49.9k yuan and an annualized rate of 2.1%; 3. seven-year low-interest plan with a down payment of 99.9k yuan and an annualized rate of 1.9%.

In comparison, Tesla’s financial incentives for Model 3 are: orders placed before April 30 can apply for 5-year interest-free or 7-year low-interest plans. Additionally, a subsidy of 8,000 yuan on insurance is available if ordered before April 30.

“Pay in full with Xiaomi, choose Tesla for installment plans,” said a salesperson at a Tesla store in Beijing.

For the seven-year low-interest plan, Xiaomi’s annualized rate is 1.9%, while Tesla’s is 0.5%. “Not all automakers can apply for a 0.5% annualized rate from banks,” emphasized Tesla’s salesperson.

The person mentioned that, according to these plans, the rear-wheel drive Model 3 is about 15k yuan cheaper than Xiaomi’s SU7 standard version, and the long-range rear-wheel drive Model 3 is about 25k yuan cheaper than the SU7 Pro.

(Chart comparing the financial policies of two Tesla models, source: On-site photo by 21st Century Business Herald)

However, the 21st Century Business Herald found that Xiaomi’s YU7 offers a 7-year low-interest plan with an annualized rate lower than the new generation SU7, and Xiaomi’s SU7 Ultra provides a five-year interest-free benefit. “The financial plans for the new generation SU7 are not aggressive, perhaps because Xiaomi is not in a rush to stimulate user orders and is leaving room for future adjustments,” said an industry insider.

Beyond financial policies, Tesla salespeople also compare after-sales services. A salesperson who just joined Tesla this year told 21st Century Business Herald that Xiaomi’s cars sell well but have slow delivery and fewer after-sales stores compared to Tesla. “Xiaomi’s after-sales stores are few, whereas Tesla has many more.”

In terms of performance, Tesla emphasizes energy consumption. The official range of all three versions of the new generation SU7 exceeds that of Model 3. Tesla sales emphasize that Model 3’s battery is self-developed and its overall range is very competitive.

Tesla sales told 21st Century Business Herald that the Model 3 weighs 1.7 tons, while the new generation SU7 weighs about 2 tons. “This means Xiaomi stacks large batteries to increase range, using 18 kWh to gain 50 km of range, but it adds 600 pounds of weight, which is not worth it.”

However, Xiaomi store sales also have counter-arguments. A Xiaomi salesperson told 21st Century Business Herald: “Every version of the new generation SU7 has strong range, and evaluations from major institutions show that its range achievement rate leads the industry, with the SU7 Pro ranking first among pure electric sedans for range.”

Regarding energy consumption differences, Xiaomi did not shy away. At the product launch of the new generation SU7, Xiaomi specifically highlighted in the presentation PPT that the CLTC energy consumption of the Model 3 rear-wheel drive and long-range rear-wheel drive versions is better than that of the new generation SU7 standard and Pro versions. However, the new generation SU7 Max’s CLTC energy consumption is 13.4 kWh/100 km, better than the high-performance all-wheel drive Model 3.

Tesla China is now viewing Xiaomi as its top competitor

Model 3 is Tesla’s best-selling model and a benchmark for pure electric sedans. Many traditional fuel car companies, when transitioning to new energy, have looked to Tesla as a model to imitate and learn from. When Mercedes launched the all-new electric CLA last year, it fully targeted Model 3. Domestic new entrants also compete with Model 3 in large numbers.

But during visits to Tesla stores, 21st Century Business Herald found that models like Xiaomi’s new SU7, which Tesla sales compare so systematically, are almost nonexistent. For example, when mentioning Mercedes CLA, Tesla sales emphasize Tesla’s status as the world’s top-selling pure electric vehicle and cannot compare the two cars in more detailed features; when asked how to choose between Li Auto i6 and Model 3, Tesla sales can only mention advantages in seats, batteries, and other minor features.

From the sales tactics at frontline stores, Tesla China has already regarded Xiaomi as its number one domestic competitor.

Tesla’s anxiety about Xiaomi is understandable. In China, Xiaomi has become an unavoidable competitor for Tesla. In 2025, Xiaomi’s full-year delivery of new cars will reach 411k units. In the same year, Tesla’s sales in China are listed at 628.9k units. Although Tesla’s total sales still surpass Xiaomi, last year Xiaomi SU7 delivered over 240k units, surpassing Model 3 and becoming the best-selling pure electric sedan over 200k yuan in 2025.

A store manager who has worked at Tesla for four years said that two years ago, when Xiaomi released its first sedan SU7, Tesla didn’t see Xiaomi as a strong competitor, only as one of many following Tesla’s car-making route. Until Xiaomi broke records in China’s auto industry, Tesla could no longer ignore this cross-industry newcomer.

In the 22-month lifecycle of the first-generation SU7, over 380k units were delivered, making it the only model competing with Model 3 in the over-200k-yuan pure electric sedan market. As of February this year, Xiaomi’s YU7 has ranked first in sales of mid-to-large SUVs for seven consecutive months, with monthly deliveries multiple times surpassing Tesla Model Y.

On March 23, Lei Jun revealed during a live delivery event for the new SU7 that the order volume had already exceeded 30k units. “The new SU7 is an upgraded version, not a revolutionary all-new product. Achieving 30k pre-orders in three days is already ahead of many peers and meets expectations,” said an investment manager.

As for deliveries, the new generation SU7 was announced on March 19, with the first batch delivered on March 23. According to Xiaomi Auto’s April 1 disclosure, the new SU7’s first-week deliveries exceeded 7,000 units. In comparison, Model 3 delivered 12.9k units in China in February this year.

For both Xiaomi and Tesla, as well as for the star models of the new generation SU7 and Model 3, their close competition has only just begun.

(This article is for reference only and not investment advice.)

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