Tesla stock is down to start the week. A new Model Y rival in China could be why.
Xiaomi (XIACY) said on its Weibo account that it will officially unveil is YU7 this week, a midsize crossover EV that will go head to head with Tesla's Model Y.
The Chinese device and upstart EV-maker said the YU7 will be revealed at Xiaomi's strategic new product launch event happening on Thursday May 22; a render of the EV was shown late last year. Chinese EV blog CnEVPost was the first to spot the post.
Xiaomi's SU7 EV sedan has been a huge hit with its domestic audience, with the Porsche (P911.DE) Taycan/McLaren supercar-looking design selling 135,000 units in 2024, with expectations for sales to more than double in 2025. Xiaomi did not reveal any sales expectations for the YU7, or when it was expected in showrooms.
The SU7, with its striking looks and tech-forward interior powered by a version of Android called HyperOS, has clearly been a hit with Chinese consumers who look to their cars as extensions of their digital devices. Expectations are for the YU7 to follow a similar path to success.
Tesla stock slipped in early trade, down 3%. News of a rival competitor in one of Tesla's biggest markets certainly isn't helping the stock, though the tech sector in the US is also trading lower on economic and debt concerns.
Tesla bulls are not complaining about recent performance, however. Tesla capped off another strong week last Friday, marking four straight weeks of gains and cutting its year to date losses to around 16%.
Tesla's addition of Chipotle president Jack Hartung to its board of directors helped boost the stock last week. Hartung could aid the board in its quest to explore 'alternative ways' to compensate CEO Elon Musk after a Delaware judge invalidated his $56 billion pay package.
Musk's big bet on Tesla's future and its trillion dollar market cap lies with the company's autonomous ambitions, with the company set to test unsupervised robotaxis in Austin this summer.
Morgan Stanley analyst Adam Jonas and select clients met with Tesla's head of investor relations to talk about the state of autonomous last week.
Key headlines from the meeting were Tesla's Austin's fleet size would be very low, 'think 10 to 20 cars' Jonas wrote, with 'plenty of tele-ops' to ensure safety, meaning human intervention from remote locations when a robotaxi needed assistance.
With companies like Alphabet's Waymo already performing 250,000 robotaxi rides per week in the US, Tesla is behind the ballwith ramping up its robotaxi offering.
Tesla and Musk argue that its vision-based system is more scalable, and that the company already has millions of EVs out on the road already capable of doing self-driving once software development is complete, and its AI-based systems trained.
That's a big if. The National Highway Traffic Safety Administration (NHTSA) is currently investigating the safety of Tesla's FSD (full-self driving) system, and submitted a detailed questionnaire for answers regarding Tesla's 'development of technologies for use in 'robotaxi' vehicles to understand how Tesla plans to evaluate its vehicles and driving automation technologies for use on public roads.'
Regulators closing examining Tesla's robotaxi testing gamelan may push the company's robotaxi timing out more that the company would like.
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on X and on Instagram.
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