Chinese EV and smartphone maker 1810.HK on Thursday priced its new electric YU7 SUV 10,000 yuan ($1,395) cheaper than Tesla's Model Y, stepping up the challenge to the U.S. firm in the world's largest auto market.

Xiaomi ADRs surged over 8% in morning trading.

The base model of the YU7 starts from 253,500 yuan ($35,364), with the more premium models YU7 Pro and YU7 Max priced at 279,900 and 329,900 yuan respectively.

Xiaomi will take orders for all three models from Thursday night.

The Model Y, which was China's best-selling SUV in May, retails from 263,500 yuan in China.

Xiaomi's CEO and founder Lei Jun has said he wants the YU7 to challenge the Model Y and analysts say it is well placed to take on the Tesla vehicle's dominance. Other rivals include Zeekr's 7X and Li Auto's L6.

The YU7 has a driving range of up to 835 kilometres (519 miles) per charge, versus the redesigned Model Y that was launched in January with a range of up to 719 kilometres.

($1 = 7.1684 Chinese yuan renminbi)