An RMB 80,000 down payment and a 7-year loan—Tesla’s “good deal” might be harder to handle than it looks.

The EV Price War Has Shifted—from Sticker Prices to Loan Terms

As 2026 begins, competition among leading EV makers has moved beyond vehicle pricing and into financing duration.

The first to act was Tesla.
For the Model 3 and Model Y, Tesla lowered the down payment to RMB 79,900, offering 5-year zero-interest or 7-year ultra-low-interest plans, with monthly payments starting from RMB 1,918.
For the Model Y L, the down payment starts at RMB 99,900, with a 7-year low-interest plan bringing monthly payments down to RMB 2,957, and—for the first time—a 5-year zero-interest option at RMB 3,985 per month.

In a market where prices are highly transparent and model updates are accelerating, such financing policies are effectively a form of “hidden price cuts.”

Xiaomi quickly followed. Lei Jun stated during a livestream that many users requested similar financial support.
Starting January 16, Xiaomi introduced a 7-year ultra-low-interest plan for the YU7, applicable to orders placed before the end of February 2026.

Soon after, Li Auto announced 7-year loan plans for the MEGA and i8, highlighting zero interest for the first three years, reducing monthly payments to around RMB 2,857. Recently, XPeng and Geely Galaxy M9 have also joined in.

Comparisons show a clear difference: Tesla and Xiaomi are effectively subsidizing interest rates. With a 30% down payment, Tesla’s effective annualized rate falls below 1%, while Li Auto’s exceeds 4.6%.

In essence, this is still a price war in disguise—manufacturers sacrificing margin to secure sales over time. As vehicle prices hit their limits, financing has become the new battlefield.

However, risks follow.

A 7-year loan may lower the entry barrier, but it far exceeds the technology iteration cycle of smart EVs.
Seven years from now, batteries, charging methods, and autonomous driving capabilities may be entirely different. The only certainty is that buyers may still be repaying loans on a technologically outdated vehicle.

If a major technological leap occurs within three to five years, residual values could drop sharply. In extreme cases, a car’s resale value may fall below the remaining loan balance. Monthly payments may look manageable today, but the risk is pushed into the future.

Another overlooked issue is the lending structure.

Tesla’s long-term plans are backed by traditional bank auto loans, while several other brands rely on financial leasing.
Under leasing, the vehicle is owned by the leasing company during the term, limiting resale, transfer, and even insurance handling. Costs are often embedded in service fees or buyout prices, reducing transparency and flexibility.

Seven-year low-interest loans are not pure benefits—they delay cost pressure and shift risk forward.

Before placing an order, consumers should ask one more question:
Is this car—and this loan—really worth a seven-year commitment?