Tesla Model Y is priced at 263,500 yuan in China, and with the recent launch of Xiaomi YU7, the American EV maker is likely to witness a dip in its market share.

Xiaomi's Hong Kong-listed shares soared eight per cent at one point before paring their gains but ending at a record high.

The YU7 is Xiaomi's second vehicle and one that undercuts Tesla's Model Y in price by nearly 4 per cent. The Model Y is China's best-selling SUV and starts at 263,500 yuan ($56,000).