Xiaomi Auto Faces Production Bottleneck Amid Soaring YU7 Orders

Xiaomi’s YU7 debut has generated overwhelming market enthusiasm, with over 200,000 pre-orders placed within three minutes and 240,000 locked-in orders recorded within the first 18 hours. However, this strong demand has exposed a critical weakness: production capacity. Delivery timelines have stretched beyond industry norms, with the Standard version requiring up to 57 weeks and the Max version at least 33 weeks, prompting competitors to seize the opportunity with targeted incentives.

Brands such as IM Motors, NIO, Zeekr, Ji Jie, and Avatr have initiated competitive strategies to attract YU7 customers, including deposit reimbursements and additional benefits. Regional offers vary, but in several cases, sales representatives have confirmed deposit compensation and supplementary services, signaling a broader industry effort to capitalize on Xiaomi’s delivery delays. Harmony Intelligent Mobility brands have also introduced similar initiatives, and historical data shows that competitor promotions targeting Xiaomi users began even before the YU7’s launch event on May 22, 2025.

Despite Xiaomi Auto’s notable achievement of delivering 135,000 vehicles within nine months of entering the market, its current factory infrastructure is under strain. Official figures indicate that the 240,000 locked-in YU7 orders alone have exhausted production capacity through early 2027. The first-phase plant, operational since March 2024, has an annual capacity of 150,000 units, while the second phase—also designed for 150,000 units—is only expected to begin mass production in July.

To address the issue, Xiaomi is accelerating its capacity expansion efforts. On June 19, Xiaomi Jingxi Technology Co., Ltd. secured land in Beijing’s Yizhuang New Town for a project focused on high-end and intelligent new energy vehicles, likely the company’s third automotive facility. Additionally, reports suggest Xiaomi is planning further plant development in cities such as Wuhan and Shanghai.

The production challenges Xiaomi now faces are reminiscent of Tesla’s early struggles, as detailed in Walter Isaacson’s biography of Elon Musk. Tesla ultimately overcame its bottlenecks through decisive measures and rapid expansion, particularly with the launch of its Shanghai Gigafactory. Given Xiaomi’s order volumes, its production expansion must be executed at an even faster pace to meet market expectations and maintain its competitive position. Whether the company can navigate this phase effectively will determine its longer-term trajectory in the automotive sector.