Xiaomi rolled out its new sports utility vehicle in Beijing on Thursday, as the firm best known for smartphones and consumer electronics gears up to further challenge Tesla in the world's largest auto market.

Xiaomi launched the YU7 at 13 of its Beijing showrooms and will start taking orders for the vehicle in July. It is keen to repeat the success of the sporty SU7 sedan, which launched last year and has outsold Tesla's Model 3 on a monthly basis since December.

Analysts have said the YU7 could pose a major threat to Tesla's best-selling Model Y but its launch comes at a time when Xiaomi, a relative newcomer to China's highly-competitive EV market, has seen new EV orders fall after a series of controversies.

Chinese authorities have been investigating a fatal highway crash at the end of March involving an SU7 in driving-assistance mode and Xiaomi has apologised for "not clear enough" marketing after customer complaints of false advertising.

Liu Jiaxing, a 34-year-old tech worker, was among the first visitors to Xiaomi's flagship showroom in Beijing Oriental Plaza on Thursday, eager to catch a glimpse of the emerald green YU7.

Liu said he was fond of the styling and colour as well as the fact that Xiaomi vehicles connect with the firm's personal gadgets and smart home products, which he felt pointed to how local brands understood Chinese consumers better than their foreign counterparts.

"I used to be more prone to US, German and French car marques, but the fast progress of China's EV sector prompts me to focus more on the products rather than brands," he said.

Another visitor was Tom van Dillen, managing partner at German management consultancy Greenkern in Beijing, who said he was not a fan of some of the YU7's intelligent features, which he described as "unnecessary", but said the YU7 was a formidable challenger to the Model Y.

He cited a "physical ecosystem advantage in the showroom where there is a dedicated area with accessories that only fit into Xiaomi cars" and their competitive price.

Xiaomi has said that it will only announce the YU7's pricing in July.

HSBC Qianhai estimated in a note last week that the new SUV will be priced between 230,000 yuan and 330,000 yuan and that Xiaomi could ship 100,000 YU7 units this year and 249,000 units in 2026.

The Model Y is priced from 263,500 yuan in China. (Reuters)