Xiaomi’s upcoming YU7 SUV generates significant buzz as the company prepares for its official July launch. At its official unveiling on May 22, Xiaomi CEO Jun Lei explicitly ruled out a rumoured 199,000 yuan (27,600 USD) starting price for the YU7, signalling that the SUV will enter a higher price bracket to reflect its premium features and avoid overlapping too closely with the SU7 sedan.

The YU7 will mark Xiaomi’s first major push into the premium SUV segment, differentiating itself from the SU7’s sportier, sedan-oriented positioning. Combining upscale interior design, including a panoramic “Hypervision” dashboard, with advanced technology like a 700 TOPS Lidar-assisted autonomous driving system, the YU7 aims to deliver a comprehensive package. The market discussion shows enthusiasm and debate around its styling and feature set. Still, there is no question that the YU7 has captured widespread attention among EV buyers, including those loyal to brands like Zeekr 7x, Tesla Model Y, and Huawei-backed Luxeed R7.

A critical element of Xiaomi’s strategy is pricing. The company must balance competitiveness with profitability, especially as the YU7 shares some potential buyers with the SU7. Pricing the YU7 too close to the SU7 risks cannibalising sedan sales, while a too-high price risks losing customers to established rivals. Xiaomi also intends to keep the YU7 cheaper than the Tesla Model Y, currently priced from 263,500 to 313,500 yuan (36,400–43,300 USD) in China, to attract cost-conscious buyers seeking premium features. This strategy also applies to SU7, overcutting Model 3 in terms of price.

With the YU7, Xiaomi stands to improve its economies of scale. The success of the SU7 has enhanced Xiaomi’s bargaining power in supply chains, and adding a second model allows the company to spread fixed costs across a larger volume of vehicles. Early forecasts suggest strong demand, potentially exceeding 200,000 pre-orders within 24 hours, which will significantly pressure Xiaomi’s production and delivery capacity.

We estimate the YU7’s starting price will be around 245,900 yuan (34,100 USD), placing it above the SU7 base model (215,900 yuan/ 29,970 USD) but maintaining a clear price gap to justify its premium positioning and avoid buyer confusion. The Pro version, equipped with air suspension and dual motors, could be priced at around 275,900 yuan (38,300 USD), while a Max version with further enhancements may reach approximately 329,900 yuan (45,800 USD). This pricing strategy will allow Xiaomi to solidify its foothold in the mid-to-high-end electric SUV market while continuing to underprice Tesla’s Model Y in China.