Tesla (TSLA) shares began the week on a downbeat note, sliding roughly 2.3% on Monday amid mounting competitive pressure from China and increased regulatory scrutiny in the U.S.
The dip comes as Chinese tech and EV newcomer Xiaomi (XIACY) announced plans to unveil its YU7 crossover electric vehicle, a direct competitor to Tesla’s popular Model Y. Xiaomi revealed on social media platform Weibo that the YU7 will debut at the company’s strategic new product launch event on Thursday, May 22. A teaser image of the vehicle had surfaced last year, generating buzz in China’s EV community. The Chinese EV blog CnEVPost first reported the announcement.
Xiaomi has already found strong domestic success with its SU7 electric sedan, a design inspired by the Porsche Taycan and McLaren supercars. The SU7 has sold 135,000 units so far in 2024, and sales are projected to more than double next year. While Xiaomi has not released sales targets or a showroom timeline for the YU7, expectations are high that it will emulate the SU7’s strong market reception.
Xiaomi’s expansion into the midsize crossover space—a key segment for Tesla—adds further competition in one of Tesla’s most important international markets. The timing of the YU7’s launch may be contributing to investor caution around Tesla shares this week.
Despite Monday’s decline, Tesla has recently enjoyed a string of gains. The stock wrapped up last week with its fourth consecutive weekly advance, trimming year-to-date losses to around 16%. Optimism surrounding Tesla’s board expansion and its autonomous vehicle plans helped drive recent momentum.
Last week, Tesla appointed Chipotle president Jack Hartung to its board of directors, a move seen as strategic as the company considers new methods of compensating CEO Elon Musk following the invalidation of his $56 billion pay package by a Delaware judge.
Meanwhile, Tesla’s ambitions in autonomous driving remain central to its long-term strategy. The company is preparing to test unsupervised robotaxis in Austin this summer, though details emerging from a recent investor meeting suggest the initial fleet will be small—just 10 to 20 vehicles—with significant human oversight via tele-operations.
Morgan Stanley analyst Adam Jonas, who attended the investor briefing, noted that Tesla’s robotaxi program is still in its infancy, especially when compared to competitors like Alphabet’s Waymo, which is already conducting 250,000 autonomous rides weekly across the U.S.
Tesla argues its vision-only system, backed by millions of EVs already on the road, offers a scalable path to autonomy. However, the company’s Full Self-Driving (FSD) technology remains under scrutiny. The National Highway Traffic Safety Administration (NHTSA) recently submitted a comprehensive questionnaire to Tesla, seeking clarity on its autonomous technology development and plans for robotaxi deployment.
As regulatory pressure builds and competitive threats mount, investors will be closely watching Tesla’s next moves—both in China and on U.S. roads.
