BEIJING (Reuters) -Chinese EV and smartphone maker Xiaomi ( XIACF ) 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. 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 ( XIACF ) 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 ( XIACF ) 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)