Tesla offers 0-interest loans for up to 5 years in China to boost sales

Tesla is offering a limited-time finance policy in China with down payments as low as RMB 79,900 and 0-interest loans for up to 5 years.

(Image credit: CnEVPost)

Tesla (NASDAQ: TSLA) is starting to offer loan deals in China to boost sales.

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The electric vehicle (EV) maker is offering a limited-time finance policy with down payments as low as RMB 79,900 ($11,040) and consumers can take advantage of 0 percent interest loans, according to its Weibo post today.

Customers who buy a Tesla vehicle directly can enjoy a 0-interest loan for up to three years. If customers purchase a Tesla vehicle through an old car trade-in, they can take advantage of a 0-interest loan for up to 5 years, according to a poster on Weibo.

Under the 3-year 0-interest loan offer, customers can make monthly payments of up to RMB 4,611 for the entry Model 3 rear-wheel-drive version, or RMB 5,111 for the Model Y rear-wheel-drive version.

Under the 5-year 0 percent interest loan offer, monthly payments are up to RMB 2,767 for the Model 3 rear-wheel-drive and RMB 3,067 for the Model Y rear-wheel-drive.

Customers who order a Model 3 or Model Y before April 30 can apply for the 5-year 0-interest loan offer if they complete delivery by June 30, but the down payment needs to be higher than RMB 79,900, according to the Tesla poster.

Customers who buy a Tesla vehicle through an old car trade-in can also get a free 90-day trial of Enhanced Autopilot (EAP) worth RMB 32,000, according to Tesla.

This is the first time Tesla has offered a 0-interest loan offer in China, as the EV market weakens at the start of the year and a price war continues.

The company had in March offered customers in China who bought already-produced Model 3s and Model Ys loans at rates as low as 1.99 percent per year, translating to annualized interest rates starting at 3.65 percent.

Tesla delivered 386,810 vehicles globally in the first quarter, down 8.53 percent year-on-year and down 20.16 percent from the fourth quarter of 2023, according to figures it released yesterday.

That's the first time since the second quarter of 2020 that Tesla's global deliveries have seen a year-on-year decline, and well below analysts' estimates of 449,080 units.

On March 22, Bloomberg reported that Tesla instructed employees at its Shanghai factory earlier in March to reduce production of the Model Y and Model 3 by working five days a week instead of the usual 6.5 days.

Notably, Tesla increased the prices of all three variants of the Model Y by RMB 5,000 on April 1 in China.

Tesla had already indirectly teased its latest price hike move 10 days ago. On March 20, local media outlet Cailian cited Tesla China insiders as saying that the company would increase prices in China on April 1, with the Model Y's price to be hiked by RMB 5,000.

The strategy of releasing the price hike plan in advance seems to be aimed at boosting orders from customers who are still on the sidelines.

The Model 3 is offered in two versions in China -- an entry-level rear-wheel drive version and a longer-range version with dual-motor all-wheel drive -- with starting prices of RMB 245,900 and RMB 285,900, respectively.

The Model Y is available in three variants in China, starting at RMB 263,900 for the basic rear-wheel-drive version, RMB 304,900 for the dual-motor all-wheel-drive Model Y Long Range, and RMB 368,900 for the dual-motor all-wheel-drive Model Y Performance.