- Tesla has removed the seven-year low-interest loan from its May car-buying incentives in China, keeping only five-year zero-interest financing plans.
- Multiple Chinese automakers may halt seven-year auto loans by the end of April as financial institutions tighten their risk exposure to ultra-long-term lending.
Tesla has adjusted its auto financing incentives in the Chinese market, dropping the seven-year low-interest loan from its May purchasing policies as banks tighten auto credit.
Consumers buying designated models before May 31 can now only choose up to a five-year zero-interest financing plan and other short-term options, according to a Weibo post published by Tesla on Wednesday.
The five-year zero-interest plan applies to the Model 3, Model Y, and Model Y L, with a minimum down payment of 79,900 yuan ($11,690) for consumers.
To offer more flexible choices, Tesla also introduced a one- to five-year low-interest loan option with a down payment as low as 45,900 yuan.
In January this year, Tesla broke from convention in the Chinese market by rolling out a seven-year low-interest car purchasing plan, becoming the first automaker in China's auto industry to introduce such an incentive.
The move was aimed at countering slowing demand during the traditional sales off-season and significantly lowering the barrier to entry for car buyers by reducing monthly payments.
This subsequently sparked a "financial war" in the Chinese auto market aimed at vying for consumers, with dozens of automakers including Xiaomi, BYD, Xpeng, Nio, and Li Auto following suit.
These carmakers rolled out similar seven-year low-interest financing plans, with some brands even offering aggressive zero-down-payment options.
However, recent reports suggest that due to potential compliance scrutiny, multiple Chinese automakers may completely halt seven-year low-interest auto loan businesses by the end of April.
This ultra-long-term lending business is facing tightening pressure from financial institutions, with some commercial banks and financial leasing companies having already requested a suspension of acceptances, according to an April 23 report by 21jingji.
The extension of loan terms and the low-down-payment model have sharply increased risk control pressures on financial institutions, as they need to conduct more comprehensive assessments of clients' medium- to long-term repayment capabilities.
Banks lack long-term personal credit data models, and the difficulty of assessing and disposing of the residual value of collateralized vehicles later on has also significantly increased, the report noted.
Loose financial policies previously helped Tesla partially mitigate early-year headwinds in China.
In the first quarter of this year, Tesla's deliveries in China stood at 112,798 vehicles, down 16.20% year-on-year, largely due to a massive 45.15% year-on-year plunge in January, according to data compiled by CnEVPost.
($1 = 6.8359 yuan)
