Tesla, Xpeng reignite China EV price war with insurance and loan subsidies

Name: China doubles down on subsidising trade-ins of conventional cars for EVs
Uploaded: 2025-02-05T08:00:40.000Z
Duration: 2 min 1 s
Description: China doubles down on subsidising trade-ins of conventional cars for EVs

Tesla and Xpeng are offering rebates on car insurance and loans in February in response to BYD’s price cut in December

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People walk past a showroom outside Tesla China’s headquarters in Beijing in July 2018. Photo: Reuters

Daniel Renin Shanghai

Published: 4:00pm, 5 Feb 2025Updated: 4:03pm, 5 Feb 2025

Tesla is offering a fresh round of subsidies in mainland China, firing the first salvo in the Year of the Snake to gain an upper hand over local companies like Xpeng and BYD in the cutthroat electric vehicle (EV) market.

Buyers of its Shanghai-made Model 3 sedans would receive an 8,000-yuan (US$1,098) subsidy for vehicle insurance, the US EV maker said on Wednesday as businesses reopened after the Lunar New Year holiday. It also said it would offer a five-year interest-free loan to eligible customers, which amounts to 20,000 yuan in savings.

Tesla said the incentives represented the biggest promotion for all its Model 3 editions – priced at 227,500 to 331,500 yuan – since late 2019, when its Gigafactory outside Shanghai started operations.

“It is the first time that insurance subsidies and interest-free loans are offered together to Chinese customers,” the company said in a statement. The offer ends on February 28, it added.

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China doubles down on subsidising trade-ins of conventional cars for EVs

While the EV maker is seeking to grow its sales in China to compensate for fewer deliveries in other markets, its action is likely to intensify a price war, eroding margins for producers and forcing more dealerships out of business. Domestic sales remain crucial as higher US tariffs hinder exports.