Lei Jun wants to push Model Y off its pedestal

Author | Wang Xiaojun

Editor | Zhou Zhiyu

After challenging the Model 3 with the Xiaomi SU7, Lei Jun is now looking to compete with the Model Y in the SUV sector.

On December 9th, Xiaomi's first SUV was announced. Xiaomi also officially announced the positioning of the SUV Xiaomi YU7 in just a few lines, which quickly trended online.

Just as everyone was puzzled by the homophonic "YU" in the name, Xiaomi explained that "YU" refers to "Y Ultra." Implicitly, it suggests a stronger Model Y. Wall Street Journal learned that the YU7 currently announced by the Ministry of Industry and Information Technology is a version equipped with lidar, with a price expected to be around 300,000 yuan. However, considering Xiaomi's strategy with the SU7, there are plans to launch lower-priced, well-equipped models to compete with the refreshed Model Y.

From the first car, the Xiaomi SU7, Xiaomi has targeted Tesla.

First, the Xiaomi SU7 fully benchmarked the Tesla Model 3; then, the recently pre-sold SU7 Ultra had a pre-sale price directly matching that of the Tesla Model S Plaid.

Now, Xiaomi's SUV model is directly competing with Tesla's best-selling Model Y. It is worth mentioning that the Model Y was also the best-selling model globally last year.

Since September this year, many new cars in the industry have aimed at the Tesla Model Y. Nio Chairman Li Bin even joked that "six major factions are attacking the Bright Summit." However, after some time, the position of the Model Y remains solid, and the voices of the attacking models have diminished. It is evident that bringing down the Model Y is not easy.

Xiaomi has started preparing early.

When responding to the reason for the early announcement of the YU7 information, Lei Jun stated that this is to hope that the YU7 test car can be unwrapped from heavy camouflage as soon as possible, which will help conduct more comprehensive and detailed long-term large-scale testing to ensure product quality and create better products.

Of course, it is also to accumulate users in advance, allowing users who plan to buy an SUV in the near future to wait and see the Xiaomi YU7.

In terms of appearance, from the time of the camouflaged car, this vehicle was revealed to be quite similar to the Ferrari Purosangue, and was jokingly referred to by netizens as "FaLami." However, it now appears that the new car continues many family design elements of the Xiaomi SU7, looking more like a taller and fatter Xiaomi SU7.

In terms of details, the semi-hidden door handles have been changed to fully hidden door handles.

Regarding the dimensions that SUV users care about, the Xiaomi YU7 is positioned as a mid-to-large SUV, with dimensions of 4999/1996/1600 mm and a wheelbase of 3000 mm, which is slightly larger than the current Model Y. Although Tesla will release a refreshed Model Y next year, based on the refreshed Model 3, the size changes are minimal, making the Xiaomi YU7's dimensions more competitive.

Finally, regarding the most suspenseful aspect of a car, the pricing. The difficulty of pricing the Xiaomi SU7 was clearly written on Lei Jun's face at the time. Fortunately, the final result proved that the starting price of 215,900 yuan was very successful, not only exceeding industry expectations for orders but also providing Xiaomi Auto with a good gross margin When Xiaomi Group released its third-quarter financial report, the automotive business was highlighted separately. The report showed that innovative businesses such as smart electric vehicles generated revenue of 9.7 billion yuan, with quarterly deliveries of 39,790 new cars, a quarter-on-quarter increase of 45.7%, and the gross profit margin of the automotive business rose to 17.1%.

From the perspective of the SU7, its pricing was 30,000 yuan lower than the refreshed Model 3 at that time; however, the pricing of the YU7 will need to reference the price of the refreshed Model Y next year to some extent.

For Xiaomi, the new car's popularity is not unexpected, but whether it can withstand the test of delivery remains to be seen.

Eight months after the launch of the Xiaomi SU7, the latest delivery cycle for new orders is still around five months, showing no signs of cooling off, which poses a significant challenge to Xiaomi's automotive production capacity.

Currently, the first phase of the factory has a production capacity of 150,000 units per year, which translates to a monthly capacity of 12,500 units. However, to deliver 130,000 new cars within nine months this year, Xiaomi Automotive began double-shift production in June. Recently, Xiaomi's monthly delivery volume has climbed to 20,000 units, indicating that the factory's actual monthly production rate is around 20,000 units.

In November, there were reports that Xiaomi's first phase was also constructing new workshops to expand the capacity for the SU7.

According to market demand for SUV models, the order volume for the Xiaomi YU7 is expected to exceed that of the Xiaomi SU7, which will present even greater challenges for delivery.

For consumers, the Xiaomi SU7 is Xiaomi's first car, and there is a novice protection period, so consumers are willing to wait longer. However, for upcoming models, this willingness to wait may diminish, and Xiaomi needs to ensure sufficient production capacity before launching new cars.

Currently, the second phase of Xiaomi's factory has been topped out. According to previous plans, this factory is expected to start production in mid-2025, which coincides with the launch time of the YU7. In terms of scale, the second phase factory is about 20% larger than the first phase factory, but even under full-load production conditions, the delivery cycle for the SU7 remains long.

Market judgment suggests that the Xiaomi YU7 could be the true "killer" for Tesla in the domestic market. This means that before this, Xiaomi must first resolve its production capacity issues.

With the official announcement of the Xiaomi YU7, the more competitive automotive market in 2025 has already begun. Various players will need to adopt a fierce competitive spirit to tackle the new round of battles, ensuring their healthy survival and securing their positions in the endgame