Elon Musk's Tesla may easily sit atop the electric vehicle throne here in the U.S., but the company has faced much bigger challenges in China – namely more competition from China-based companies.

Now, Musk's car company faces a new upcoming challenge. One of China's most popular smartphone manufacturers is preparing to enter the electric car market in the country.

Xiaomi enters the EV space

Xiaomi, best known for its Android smartphones, has recently applied for a license to sell EV cars in China, according to a new report from Android Authority. The company's first EV car products, per regulatory filings, are the Xiaomi SU7 car series featuring the SU7 and the SU7 Max electric vehicles.

While the filing has some details regarding the car's top speeds and weight, perhaps the most interesting feature is one that's not included in the application: HyperOS, an operating system built to connect users' home, car, and mobile devices.

Xiaomi has had a good couple of weeks, recently sharingthat its latest smartphone sold over one million units in just two weeks in China. The company's latest phone runs on Xiaomi's new HyperOS operating system. 

Tesla has had its ups and downs in China over the years. The company's Model Y became the top-selling EV in the world earlier this year, buoyed by tens of thousands of sales in China, which simultaneously made it the top-selling car in the country for the first quarter. However, the China-based BYD remains strong in the country and remained the top-selling EV manufacturer when sales of all of its top models are taken into consideration. Just last month, Tesla's popularity dropped throughout the year in China, taking a reported11 percent tumble year-over-year.

With Xiaomi planning to enter the car market, complete with fully integrated OS experience between its EVs – and its massively popular smartphones that many in China will already own – consumers may look towards the China-based company over Musk's.

Factor in the already stiff competition by other EV manufacturers like BYD and Tesla certainly will be facing new challenges ahead in China.