In a speech delivered at the Beijing National Convention Center, Lei described the teardown as a meticulous process, noting that his team examined “every component, one at a time.” He praised the Tesla model as “a very, very outstanding car,” but asserted that Xiaomi’s own vehicle was built with equal precision, especially when it came to interior space and battery performance.
This disclosure arrives at a time when Tesla’s presence in the Chinese market is under growing pressure from domestic competitors. Companies like Xpeng, Nio, and now Xiaomi are targeting the same segment with more affordable electric vehicles. As reported by Business Insider, Tesla’s China sales dropped by 4% in August compared to the previous year, a sign that consumer preferences may be shifting.
Reverse Engineering for Strategic Insight
Xiaomi’s decision to acquire multiple Tesla Model Ys and systematically dismantle them highlights the brand’s methodical approach to entering the electric vehicle sector. During his address, Lei shared that the company began the teardown process at the beginning of the year, emphasizing that each part was analyzed closely to better understand the model’s strengths and shortcomings.
Behind Lei on stage, a presentation screen displayed a side-by-side visual comparison of Tesla’s Model Y and Xiaomi’s YU7. This demonstration aimed to show how the new Chinese SUV aligns with — and diverges from — Tesla’s popular design. As highlighted in the source, Lei was keen to stress that this wasn’t an act of criticism, but rather a study in excellence: “The Model Y is a very, very outstanding car,” he reiterated.
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Design Focused on Space and Performance
A significant focus of Xiaomi’s development process appears to have been on the interior configuration of the YU7. Lei explained that Xiaomi’s team spent considerable time reflecting on how to make the most of the cabin layout. Speaking to a packed audience, he stated that the YU7’s final design “definitely does not lose to the Model Y” when it comes to space utilization.
Battery life was another point of comparison. While Lei did not disclose specific figures during his speech, he expressed confidence that the YU7’s performance stood out, especially relative to its pricing. According to his remarks, the vehicle’s overall performance-to-price ratio was one of its main strengths. This is a key argument Xiaomi appears to be making in a market where affordability and features are crucial to consumer decisions.
Local Competition Reshaping the Chinese EV Market
Xiaomi is entering the EV sector at a time when local manufacturers are gaining momentum. In June, the company’s new YU7 SUV reportedly attracted more than 240,000 preorders within 24 hours of launch, a sign of strong domestic interest. This comes as Tesla faces slowing momentum in China, with sales figures dropping to 83,200 units in August — a 4% decline from the same period last year.
Chinese EV companies are increasingly challenging Tesla by offering cheaper alternatives without sacrificing innovation. Lei acknowledged this dynamic by stating that if a customer didn’t choose the YU7, “you can consider Model Y,” signaling confidence in Xiaomi’s position without dismissing the established competitor. Xiaomi and Tesla declined to comment further when contacted by Business Insider.
