Tesla recently announced a major move in the Chinese auto market, offering a significant insurance subsidy of RMB 8,000 ($1,100) for all variants of the Model 3 electric sedan. This move comes as the market enters a slow season, and local EV makers are expected to follow suit to remain competitive.
The insurance subsidy, available from February 5-28, applies to customized vehicles, new existing vehicles, show cars, and cars for test drives. Customers must purchase their car insurance from an insurance company working with Tesla to qualify for the subsidy.
This announcement comes less than a month after Tesla raised the prices of all three variants of the Model 3 in China by RMB 3,600. Following the 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.
With the new insurance subsidy, the starting prices of the Model 3 variants are reduced to RMB 227,500, RMB 267,500, and RMB 331,500, respectively. In addition to the insurance subsidy, Tesla continues to offer a five-year zero-interest financing program for the Model 3 and Model Y models produced at its Shanghai factory.
This move by Tesla signals the start of post-Chinese New Year promotions in the EV market, hinting at potential price wars in the industry. Tesla has a history of using insurance subsidies as a key tool in price wars, with previous promotions including subsidies of up to RMB 8,000.
The revival of this promotional tool is expected to boost Tesla’s sales but could also prompt local EV makers to offer similar incentives as the auto market enters a slow season at the beginning of the year. Other EV makers in China, such as BYD, Nio, Li Auto, Xpeng, Zeekr, and Leapmotor, have reported mixed delivery or sales figures for January, indicating a challenging market environment.
As Tesla leads the way with its insurance subsidy for the Model 3, the Chinese EV market is poised for increased competition and potential price adjustments from other players in the industry. Customers can benefit from these promotions by taking advantage of lower prices and attractive financing options for electric vehicles.
