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Xiaomi's 'stunning' new YU7 is the latest threat to Tesla in China

Xiaomi unveiled its second car, the YU7, in Beijing on Thursday. The electric SUV is set to compete directly with Tesla's best-selling Model Y in China.

Morgan Stanley analysts led by Adam Jonas and Andy Meng wrote in a note previewing the YU7's launch that the new SUV would be another challenge to Tesla. Its sales dipped last month, Deutsche Bank AG said, which came amid claims of misleading marketing on the high-end SU7 Ultra and concerns over a fatal crash involving an SU7 in March. The crash, in which three people died after their SU7 hit a cement barrier shortly after disengaging from driver-assist mode, sparked a regulatory crackdown on autonomous driving features in China.

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