On April 22, 2025, Tesla China announced upgraded its purchase incentive, offering five-year interest-free financing across all variants of both the Model 3 and Model Y, available until June 30.

This is the first time the Tesla has extended such financing terms to its entire entry-level lineup concurrently in China.

Since the debut of the new Model Y “Juniper”, Tesla has been ramping up production and deliveries, delivering 6,700 Model Y in the first week of launch to 14,600 units in the last week of March 2025.

However, that sales momentum sharply fell to 2,500 units in the 14th week of 2025. While W15/16 saw some improvement with 3,900 and 4,000 Model Y delivered, that remains far from last month’s performance.

Hence, the timing of this first-ever purchase incentive (5-year interest-free financing) on both vehicle model makes a lot of sense.

Tesla has had a disappointing first-quarter, with 13% year-over-year decline in global deliveries to just 336,700 vehicles - the company's lowest quarterly performance since the second quarter of 2022.

China remained Tesla's largest single market, accounting for approximately 40 percent of total deliveries during this period.

However, Tesla's position in the Chinese market shows signs of weakness. First-quarter wholesale sales in China declined by 21.8% compared to the same period in 2024, while retail sales remained essentially flat.

These figures stand in stark contrast to the broader Chinese new energy vehicle (NEV) sector, where leading domestic automakers (i.e. BYD) continue reporting robust double-digit growth, with several electric vehicle startups (i.e. XPeng) more than doubling their sales year-over-year.

Tesla has in the past and continue to stimulate demand with interest-free financing in an increasingly competitive environment where Chinese brands like BYD, XPeng, and Li Auto are gaining market share through aggressive pricing and faster model refresh cycles.

While the five-year zero-interest offer can help Tesla increase sales volume at the expense of margin in the short-run, the long-term threat coming from domestic automakers persists.

We previously learned that Tesla is preparing a “stripped-down” Tesla Model Y, codenamed E41, in the second half of 2025, with the timing of launch dependent on the success of Juniper.

As the 5-year zero financing ends by mid-year, we can expect a more affordable model soon. Tesla’s CFO Vaibhav Taneja also hinted at more products to follow.