Tesla (NASDAQ: TSLA) on January 24, 2026 rolled out a new purchase incentive in China, offering an CNY 8,000 (c. $1,100) insurance subsidy for selected Model 3 variants, as automakers intensify promotions to offset upcoming changes to China’s new energy vehicle tax policy.

The subsidy applies to the Model 3 rear-wheel drive, long-range rear-wheel drive, and long-range all-wheel drive versions ordered by February 28, 2026. Tesla said the same deadline applies to its updated financing offers, which include both five-year zero-interest and seven-year low-interest financing.

Source: Weibo @特斯拉

Under the seven-year financing option, eligible Model 3 buyers can make a minimum down payment of CNY 79,900 (c. $11,500) and secure monthly payments as low as CNY 1,759 (c. $300), calculated on an equal principal-and-interest basis after national interest subsidies. Tesla confirmed that a five-year zero-interest alternative is also available for the same variants.

Tesla currently prices the Model 3 rear-wheel drive at CNY 235,500 (c. $33,900), the long-range rear-wheel drive at CNY 259,500 (c. $37,300), and the long-range all-wheel drive at CNY 285,500 (c. $41,100). The Model 3 performance all-wheel drive version is priced from CNY 339,500 (c. $48,800) and is not included in the insurance subsidy program.

The January 24 announcement followed an earlier round of incentives launched on January 6, when Tesla introduced seven-year low-interest financing across the Model 3, Model Y, and Model Y L lineups.

At that time, Tesla said Model 3 buyers could secure monthly payments as low as CNY 1,918 (c. $275), while Model Y monthly payments started from CNY 2,263 (c. $325). The Model Y L was offered with monthly payments as low as CNY 2,947 (c. $425), and also debuted a five-year zero-interest option with monthly payments starting at CNY 3,985 (c. $575).

Tesla later confirmed that the CNY 8,000 insurance subsidy also applies to selected configurations of the Model Y and Model Y L. For the Model Y rear-wheel drive, long-range rear-wheel drive, and long-range all-wheel drive versions, monthly payments can fall to CNY 2,188 (c. $315) under the financing plan.

Model Y L buyers can choose between a five-year zero-interest plan with monthly payments as low as CNY 3,985 (c. $575) or a seven-year low-interest plan with monthly payments starting from CNY 2,849 (c. $410), provided orders are placed by February 28.

Tesla’s pricing push comes as its global deliveries decline. In 2025, Tesla delivered approximately 1.636 million vehicles worldwide, down about 8.6% year-on-year, marking a second consecutive annual decline.

The year also marked the first time Tesla was overtaken in annual global electric vehicle sales by BYD (HKG:1211), which reported total vehicle sales of about 4.6024 million units, including more than 2.2567 million battery electric vehicles, up 27.86% from a year earlier.

The Tesla incentives have triggered rapid responses from Chinese manufacturers. On January 15, Xiaomi founder and chief executive Lei Jun said the company had launched a seven-year low-interest financing plan for the YU7, with a minimum down payment of CNY 49,900 (c. $7,200) and monthly payments starting at CNY 2,593 (c. $375). XPeng (NYSE:XPEV) followed on January 22 with a seven-year low-interest installment plan across its lineup, offering monthly payments as low as CNY 1,355 (c. $195) for its MONA M03 515 long-range Plus variant.

More than 20 automakers have reportedly launched promotions covering over 75 vehicle models since January 1, 2026, including cash subsidies, fixed-price offers, interest-free loans, insurance subsidies, and trade-in incentives.

Surge in incentives are related to changes in China’s new energy vehicle purchase tax policy. Starting in 2026, NEVs will shift from full tax exemption to a 50% reduction, capped at CNY 15,000 (c. $2,200), while stricter technical requirements for tax eligibility took effect on January 1, pushing automakers to defend volumes through pricing and financing tools rather than relying solely on policy support.

Conversion rate: 1 USD = 6.956 CNY as of January 25, 2026