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Tesla offers 0% financing on Model Y in China amidst slowing demand

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Max McDee, 18 March 2025

Tesla

Tesla has begun offering 0% interest loans on its Model Y in China, pointing to a potential slowdown in demand for the popular electric SUV. Tesla faces increasing competition in the world's largest electric vehicle market. The company is now providing zero-interest loans for up to three years on the base Model Y rear-wheel drive (RWD) model, with a 30% down payment.

The decision to offer these incentives follows a period of perceived high demand after the launch of the refreshed Model Y. However, current delivery timelines suggest that the initial surge may have subsided. Tesla now quotes a 2-4 week delivery window for the Model Y RWD, while the Long Range all-wheel drive (AWD) model has a 6-10 week wait. This difference in delivery times indicates stronger demand for the Long Range version, which recently saw a price increase of RMB 10,000 ($1,380).

Tesla offers 0% financing on Model Y in China amidst slowing demand

Tesla's new financing offer is valid for purchases made between March 18 and April 30, 2025, with vehicle pickup required before the order expiration date. The 0% interest loan applies specifically to the Model Y RWD - Tesla's best-selling model in China. The company also offers discounted loan rates for smaller down payments.

Tesla's financing incentives are seen as a sign that Tesla is working to maintain sales momentum in the face of stiff competition. Recently, the Xiaomi SU7 electric sedan surpassed the Tesla Model 3 in sales in China. The SU7 boasts a 31-34 week order backlog, significantly longer than Tesla's 1-3 week wait.

Tesla offers 0% financing on Model Y in China amidst slowing demand

Tesla had previously introduced an RMB 8,000 ($1,100) insurance subsidy and 0% loans for the Model 3. These incentives were initially withheld from Model Y due to perceived higher demand following its refresh and limited supply. The re-introduction of financing incentives on the Model Y suggests that Tesla has already cleared the initial backlog of orders and is now focusing on stimulating demand.

The ratio of RWD to AWD Model Y sales is estimated to be as high as 4:1, and changes to the RWD model's pricing and incentives have a substantial impact on Tesla's overall sales in China. The sudden introduction of these incentives has surprised industry observers, who expected a gradual decline in demand much later in the year.

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