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.

Chinese EV and smartphone maker Xiaomi on Thursday priced its new electric YU7 SUV from 253,500 yuan ($35,364), almost 4% below Tesla's Model Y, stepping up the challenge to the U.S. firm in the world's largest auto market.

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