Tesla Launches "7-Year Ultra-Low Interest" Auto Financing; Xiaomi and Li Auto Quickly Follow, Sparking Industry Battle

In early 2026, Tesla launched a "seven-year ultra-low interest" financing plan in China for multiple variants of its Model 3 and Model Y, featuring an annual percentage rate (APR) as low as 0.98% and monthly payments starting from just RMB 1,918. The move aims to boost sales and stabilize its pricing structure. This initiative quickly triggered a ripple effect: Xiaomi Auto swiftly followed suit with a similar offer for its YU7 model, while Li Auto introduced seven-year loan plans for its MEGA and i8 models, with select options offering interest-free payments for the first three years. Brands like Dongfeng Yipai have also entered the fray. Although low monthly payments lower the barrier to car ownership, industry insiders caution that rapid technological advancements over a seven-year period could significantly erode vehicle residual values, potentially leading to a scenario where the outstanding loan balance exceeds the car’s market value. Experts advise consumers to rationally assess long-term ownership costs and avoid overlooking future uncertainties solely for the sake of short-term incentives.