Xiaomi, known primarily for its smartphones, is offering into new ground with the impending introduction of an electric SUV aimed directly at challenging Tesla’s popular Model Y.

According to internal sources, Xiaomi is precisely crafting its entry into the electric vehicle (EV) market, closely studying and benchmarking against Tesla’s Model Y during the development process.

This move into the EV sector has been in the works since Xiaomi’s CEO, Lei Jun, announced the company’s intentions in 2021. Originally focusing on producing the SU7 sedan, Xiaomi has now shifted gears to expedite the creation of its SUV model.

The SUV’s launch is scheduled for late 2025 or early 2026, strategically timed to coincide with the completion of the second phase of Xiaomi’s advanced assembly plant in Beijing. This facility is critical to Xiaomi’s EV manufacturing plans, with ambitions to achieve an annual production capacity of 300,000 vehicles.

Although specific details about the upcoming SUV are still undisclosed, industry insiders suggest that Xiaomi is targeting the mass market, leveraging the success of its first EV, the SU7 sedan.

The company aims to address any shortcomings from its initial EV venture, ensuring that its new SUV excels in performance, features, and affordability.

Speaking of affordability, Xiaomi plans to dislocate the Chinese EV market by offering its SUV at a more accessible price point compared to competitors. While the SU7 starts at RMB 215,900, rumors indicate that Xiaomi’s SUV could be priced around RMB 150,000, escalation its application to a wider consumer base.