- Tesla is offering a RMB 8,000 ($1,100) insurance subsidy for the Model 3.
- Local EV makers are likely to follow as the market enters the slow season.
Tesla (NASDAQ: TSLA) fired the first shot in the Chinese auto market price war on the first working of the Year of the Snake in the Chinese lunar calendar.
The US electric vehicle (EV) maker announced today that it is offering an insurance subsidy of RMB 8,000 ($1,100) for all variants of the Model 3 electric sedan, reviving a promotional tool it has used many times before.
The insurance subsidy is available from February 5-28 and applies to customized vehicles, new existing vehicles, show cars, and cars for test drives. Customers will need to purchase their car insurance from an insurance company that works with Tesla to qualify for the subsidy.
Notably, less than a month ago, Tesla raised the prices of all three variants of the Model 3 in China all by RMB 3,600 on January 10, when the entry-level variant had a longer range.
After that price hike, the Model 3 rear wheel drive, long range all-wheel drive, and all-wheel drive performance variants are priced at RMB 235,500, RMB 275,500, and RMB 339,500, respectively.
After the latest insurance subsidy of RMB 8,000, the starting prices of the three variants of the Model 3 are reduced to RMB 227,500, RMB 267,500, and RMB 331,500, respectively, Tesla emphasized on Weibo.
Meanwhile, Tesla’s five-year zero-interest financing program continues to be available till February 28 for the Model 3 and Model Y — two models built at its Shanghai factory.
Under the insurance subsidy and five-year zero-interest financing package, Chinese customers can buy a Model 3 with a down payment as low as RMB 79,900 and monthly payments as low as RMB 2,460 for the rear-wheel-drive version, and RMB 3,127 for the long-range all-wheel-drive version, according to a Tesla poster on Weibo.
China just finished its Spring Festival holiday from January 28 to February 4, and today is the first working day of the Year of the Snake in the Chinese lunar calendar.
Tesla is the first EV maker to start promotions after the Chinese New Year break, hinting that the industry will face fiercer competition next.
In the past few years, Tesla has repeatedly used insurance subsidies as one of the key tools in price wars.
In the fierce price war in 2023, the company started marketing for the RMB 4,000 insurance subsidy on January 2, although the promotion continued the measures from the end of 2022.
In June 2023, Tesla increased that insurance subsidy to RMB 8,000, albeit for a limited time. In the second half of 2023, Tesla used the insurance subsidy tool for two more times, according to CnEVPost’s tracking.
On January 1, 2024, Tesla announced a smaller RMB 6,000 insurance subsidy for the entry-level variant of the Model 3.
On March 1 of last year, Tesla announced that the promotion covered the Model 3 and Model Y, with the amount increasing to RMB 8,000. Tesla had not revived the tool since then.
Reviving the promotional tool is expected to help Tesla increase sales, but it could also trigger local counterparts to follow suit as China’s auto market enters a slow season at the beginning of the year.
Earlier this month, a number of EV makers reported mixed January delivery or sales figures.
BYD (HKG: 1211, OTCMKTS: BYDDY) sold 300,538 new energy vehicles (NEVs) in January, up 49.16 percent from 201,493 a year earlier, but down 41.62 percent from 514,809 in December.
Nio (NYSE: NIO) delivered 13,863 vehicles in January, up 37.87 percent from 10,055 a year ago, but down 55.48 percent from 31,138 in December.
Li Auto (NASDAQ: LI) delivered 29,927 vehicles in January, down 3.97 percent from 31,165 a year ago and down 48.85 percent from 58,513 in December.
Xpeng (NYSE: XPEV) delivered 30,350 vehicles in January, up 267.88 percent from 8,250 a year ago, but down 17.29 percent from 36,695 in December.
Zeekr (NYSE: ZK) delivered 11,942 vehicles in January, down 4.75 percent from 12,537 a year ago and down 56.08 percent from 27,190 in December.
Leapmotor delivered 25,170 vehicles in January, up 105.02 percent from 18,618 a year ago, but down 40.8percent from 42,517 in December.
($1 = RMB 7.2514)
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