Tesla Inc (NASDAQ: TSLA) has grappled with a demand slowdown in recent months, but it looks like things are only going to get worse for the EV maker in the second half of 2025.
Data from Jato Dynamics last week confirmed that BYD has robbed the multinational of its long-held title of the best-selling EV brand in Europe.
However, the threat to Tesla sales is not restricted to BYD only. Even the newcomers like Xiaomi stand just as much a chance to eat into its market share – at least in their home ground (China).
That said, TSLA shares are currently up more than 50% versus their recent low.
Xiaomi’s YU7 could hurt Tesla Model Y sales in China
Xiaomi, the Beijing headquartered technology company that entered the EV space only last year, is already taking aim at Tesla’s market share in China.
Last week, Xiaomi unveiled a new SUV dubbed the YU7 that reportedly offers 760 kilometres of driving range, well above 719 kilometres on Tesla’s extended-range Model Y.
That’s significant since the driving range is often top-of-mind when a consumer is out to buy an electric vehicle.
More importantly, the YU7 is broadly expected to be priced similarly to the Model Y in China.
“We expect YU7 would significantly erode Tesla Model Y’s China market share,” said Jeff Chung in his research note following Xiaomi’s YU7 event.
Xiaomi to price YU7 similarly to the Model Y
Chung expects Xiaomi to price its YU7 between 250,000 yuan and 320,000 yuan in China, which is comparable to 263,500 yuan for the extended-range Model Y.
According to the Citi analyst, the upcoming SUV could sell up to 30,000 units per month, weighing significantly on Tesla’s share in the world’s largest automarket.
Xiaomi is expected to officially announce the price of its YU7 at an event next month.
Note that Xiaomi’s entry in the electric vehicle market has resulted in a meaningful increase in its stock price.
Over the past 12 months, the EV stock has rallied close to 200%.
Is it worth investing in Tesla for the second half of 2025?
Investors should note that Tesla is already losing to BYD in Asia’s largest economy.
In the six months ended April, the homegrown EV giant’s Seagull was the most sold new energy vehicle in China.
In fact, Tesla was not even in the top seven best-selling electric vehicle brands in China in April.
The rising competition has even started making Wall Street analysts a bit more cautious on TSLA shares this year.
At the time of writing, the consensus rating on Tesla stock sits at “hold” only.
Investment firms see Tesla Inc as fairly priced at about $308, which translates to a potential downside of nearly 10% from current levels.
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