Scene one. In early April 2016, Tesla unveils the Model 3 with great fanfare. Although the car will not be delivered to the first customers until a year later. 115,000 of them already reserve their car in the first half-hour after orders open on a Friday. By the end of Sunday, there are already 276,000, and three weeks later, 400,000 users have paid the required $1,000 deposit.
Scene two. End of March 2024. Xiaomi, the mobile phone manufacturer, enters the world of automobiles with the launch of the SU7, a 100% electric sedan rivaling a Tesla Model S or a Porsche Taycan. In the first 24 hours, 90,000 eager buyers register to be the first to own it.
The SU7 sedan was the first model launched by Xiaomi in 2024
240,000 firm orders in 18 hours
Scene three. Early July 2025. We stay with the same company but switch vehicles. Now it's the turn of the YU7, an SUV also with batteries and five meters long. The frenzy begins: in just 18 hours, the company announces that it has 240,000 firm orders. Meaning, customers who have paid between $700 and $2,000 to secure one and have it delivered as a priority. The car, for reference, costs 253,500 yuan in its basic version, about $36,000 at the exchange rate. That is, about $1,400 less than the Tesla Model Y, once the benchmark for all rival brands.
Although the fear spreads far beyond Tesla, which in the first five months of this year only holds a 4.6% share of the NEV market, or New Energy Vehicles. That is, electric, extended-range electric, and plug-in hybrids.
The seismic wave also affects other startups like Zeekr, LeapMotor, or Nio and reaches BYD, the giant whose share in NEVs is close to 30%, almost 10 times more than Xiaomi's. In April, BYD presented its flagship, the Tang L, a model that in many specifications surpasses the YU7 and is cheaper, but "did so without tens of thousands of pre-orders and without the attention of most traditional media," says Jiri Opetal, editor-in-chief of the digital publication CarNewsChina. "The fan base that Xiaomi has is something that BYD and other Chinese manufacturers can only dream of," he adds.
This fact was witnessed by the author of this report, when a year ago, visiting the Beijing Auto Show, he encountered a swarm of journalists and the public following someone with a phone in hand. That someone was not a music or movie star or a mega influencer: it was the CEO of the company, Lei Jun. And the only car exhibited at the fair, the SU7, was also the only one that required a long line to get a close look or get inside.
Jun has no shortage of followers, even willing to overlook the accident involving one of their cars with the semi-autonomous driving system engaged, which resulted in the death of three people.
Nor is he lacking in ambition. The Beijing-based company announced its foray into the automotive world in 2021, with an initial investment of $1.4 billion. It then added the promise to inject another $10 billion by the end of this decade, with the declared goal of selling 10 million cars worldwide. That is slightly less than what Toyota sold in 2024, the global leader in this industry for years, although also half of what Elon Musk has promised to achieve with Tesla...
It won't be an easy task. In fact, the tech company's boom could lead to its downfall. Or at least, it will have to face a sweet dilemma: its limited production, far surpassed by the onslaught of orders, has caused waiting lists for the YU7 to skyrocket to 60 weeks, leading to dissatisfaction among many customers.
Some of its competitors are taking advantage of this situation by launching advertising campaigns inviting those users to buy one of their models for almost immediate delivery compensating them for the money they had advanced for Xiaomi's SUV. Additionally, Jun is also dealing with opportunists selling priority delivery orders or the car itself upon receipt, with substantial profits, of course.
"Please, have a little patience with us and wait," declared the company's CEO. Also, they are allowing some customers to modify their orders so that the waiting times are more realistic and the production schedule does not backfire.
Xiaomi only has one factory near Beijing with a theoretical production of 300,000 units per year. But they have already purchased half a million square meters to expand those volumes by 50%. Still, insufficient capacity as only the committed orders for the YU7, plus the normal flow of the SU7, exceed the forecast for all of 2026. Furthermore, estimates suggest that the demand for the new model will triple that of the sedan.
These tensions will delay the company's entry into foreign markets until at least 2027. They will only consider starting exports "when the current great pressure to meet orders in China has decreased," Lei Jun said, although that date had already been considered before.
Nothing is impossible considering what BYD has achieved. It took 13 years to manufacture its first million vehicles, but then only 18 more months to reach three million, another nine months to hit five million... And the last two million, up to the 11 million it has now, were done in four months. By the way, achievements based on its Chinese factories since in 2024 only 10% of its production - 4.27 million vehicles - was sold abroad.
The question is at whose expense Xiaomi will grow. Western brands have gone from having 65% of the total Chinese market to just over a third, but they will not disappear from the scene. So, the most affected will be mostly local competitors.
"The Chinese automotive market is one of the most competitive in the world, with a very intense price war, rapid innovation, and new participants continually raising the bar," states a study conducted by the consulting firm AlixPartners.
This situation, combined with excess installed capacity, is undermining the profitability of companies, leading the authors of the study to predict that "of the 129 brands currently selling NEVs in China, only 15 will be financially viable by the end of this decade," as tough competition will drive some out of the market and promote the concentration of others. In fact, the Chinese government itself is considering doing the latter with some of the manufacturers it controls.
AlixPartners does not name these 19 survivors, only that together they will hold 75% of the electric and plug-in hybrid market. And, according to Stephen Dyer, automotive director at the consulting firm for Asia, "the consolidation process will be slower as local governments could support non-viable brands due to their importance to local economies, employment, and supply chains."
Currently, the markets clearly support three of these plug-in vehicle-focused manufacturers: BYD, Xpeng, and, above all, Xiaomi. In the last 12 months, their stocks have risen by 37%, 138%, and 241%, respectively. In the same period, the global index in which they trade rose by 36%.