Xiaomi’s spectacular rise in China’s electric vehicle (EV) market reached a defining moment in October 2025 as it outperformed Tesla for the first time. The company sold 48,654 cars—nearly double Tesla’s domestic sales—signaling a major reordering of the world’s largest EV market. The milestone underscores Chinese consumers’ growing preference for local brands, the fading dominance of foreign automakers, and Xiaomi’s unexpected success in translating its tech ecosystem into automotive prowess. Tesla, meanwhile, faces a steep decline in both sales and market share amid an industry-wide slowdown, creating a new phase of competition defined by localization, pricing, and innovation agility.

Xiaomi Surpasses Tesla in China EV Sales

In a striking turn for the electric vehicle industry, Xiaomi sold 48,654 EVs in October 2025, decisively overtaking Tesla’s 26,006 units, according to the China Passenger Car Association. The achievement marks Tesla’s weakest monthly performance in three years and highlights a clear shift: Chinese consumers are increasingly embracing domestic EV brands over foreign alternatives.

Following the announcement, Xiaomi’s Hong Kong-listed shares surged 4% to HK$44.62, reflecting investor confidence in its expanding automotive footprint. The company’s success was largely driven by its YU7 SUV, which delivered 33,662 units, capturing nearly 69% of Xiaomi’s total monthly sales. The YU7 alone outsold Tesla’s Model Y, which recorded 19,488 deliveries in China during the same period.

Launched in June 2025, Xiaomi’s YU7 has already amassed over 80,000 deliveries within five months, a feat unmatched by any new entrant in China’s competitive EV sector this year. Its blend of performance, integrated smart technology, and competitive pricing has resonated strongly with tech-savvy middle-class buyers.

Tesla’s Domestic Struggles Deepen

Tesla’s performance in China has weakened considerably. The company’s October sales fell 36% year-over-year, marking its lowest volume since November 2022. This decline comes despite new product introductions designed to bolster demand, such as the six-seat Model Y L launched in August and a long-range variant revealed in early November.

Tesla’s market share plummeted to 3.2%, a sharp drop from 8.7% a year earlier, indicating eroding traction against local competitors. Analysts attribute the slump partly to intensified price competition, slower consumer appetite after subsidy cuts, and Tesla’s limited customization for Chinese user preferences.

Even as its domestic sales faltered, Tesla boosted exports from its Shanghai Gigafactory, shipping 35,491 vehicles abroad in October—its highest export tally in nearly a year. This strategy has helped offset weak local uptake but highlights Tesla’s increasing reliance on overseas markets to sustain production volumes.

Market Cooling Adds Pressure on Global Brands

The broader Chinese car market softened in October as government purchase subsidies and incentives expired. Overall passenger car sales fell 0.8% year-over-year, signaling a cooling phase after two years of rapid expansion in the EV segment.

Even market leader BYD, which continues to dominate China’s new energy vehicle (NEV) sector, recorded slower momentum with about 442,000 units sold—reflecting a broader deceleration that spared few players. Against this backdrop, Xiaomi’s sustained growth stands out as a rare exception.

So far in 2025, Xiaomi has sold 315,376 vehicles, putting it within reach of its 350,000-unit annual goal. Its vertically integrated approach—linking car controls with its smartphone ecosystem—has delivered an experience that feels seamlessly digital, giving Xiaomi a competitive edge in user engagement and ecosystem loyalty. The company has also leveraged its manufacturing expertise from consumer electronics to streamline automotive production, reducing costs and scaling rapidly.

However, demand far exceeds supply. Current delivery times stand at 32 to 38 weeks for the YU7 SUV and 26 weeks for the SU7 sedan—an indication of both strong orders and production bottlenecks.

China’s EV Landscape Undergoes Strategic Rebalancing

Tesla’s decline in local rankings illustrates the shifting dynamics of China’s EV sector. According to CPCA data, Xiaomi climbed to eighth place among China’s new energy vehicle manufacturers in October with a 3.8% market share, while Tesla fell out of the top 10 for the first time since August 2022.

From January through October, Tesla’s retail sales in China totaled 458,710 vehicles, representing an 8.4% decline year-over-year. Meanwhile, a new generation of Chinese automakers—Xiaomi among them—is scaling up aggressively with localized innovations, affordable pricing models, and deep integration of AI-driven software and smart connectivity.

Xiaomi’s momentum highlights how domestic EVs are transforming from mere hardware into comprehensive smart-lifestyle products. The company’s expertise in consumer technology—especially its operating systems and data-driven apps—positions it well to dominate the intersection of mobility and digital living.

As the Chinese market transitions from subsidy-driven volume to brand-driven loyalty, this evolution favors brands like Xiaomi, which blend tech sophistication with national appeal.