Summary of Key Points in Plain Language
Recently, there’s been a particularly interesting new development in the new energy vehicle industry: in previous years, the price wars were straightforward, with manufacturers directly reducing the official recommended prices, clearly stating things like “this car is 30,000 yuan cheaper.” It was very easy for consumers to calculate the actual cost. However, this September, the promotional approach has completely changed. Tesla is one of the few brands that still dare to offer cash discounts on existing vehicles. Many domestic car companies have left their official recommended prices unchanged, instead packaging discounts into various perks such as zero-gravity seats, zero-interest loans, trade-in subsidies, advanced driving services, and storage boxes, claiming “total discounts of over 100,000 yuan.” Consumers now have to do some complex math to figure out how much they’ll actually be paying.
Essentially, this isn’t the kind of nationwide price war that swept the industry in 2023. It’s more of a “stealthy battle” by car companies, which have already pushed their profits down to the minimum and are reluctant to directly lower their official prices. They’re taking advantage of the “Golden September and Silver October” sales period to boost third-quarter sales. The discounts may seem large on paper, but they are mostly targeted at existing vehicles and intended to drive short-term sales. Ordinary consumers can easily be misled by these figures.
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Detailed Explanation of Each Point
1. The so-called “100,000 yuan in total discounts” is not a direct reduction in the car price
Many people think that when they see a “discount of over 100,000 yuan,” the car price is being reduced by that amount, meaning a 200,000 yuan car would now cost 100,000 yuan. That’s a big misunderstanding. The way car companies calculate these discounts is similar to when you go to a restaurant and the owner offers you a gift package worth 200 yuan, which includes napkins that cost 2 yuan, a side dish that costs 10 yuan, and a coupon that discounts 50 yuan on your next purchase (even if you don’t need it). All these items are added up to create the total benefit of 200 yuan based on the retail price listed in the store.
For example, the Hongmeng Zhihang Xiangjie G9 is advertised with a 100,000 yuan discount, which includes zero-gravity seats that cost the company less than 5,000 yuan per unit. If you plan to pay in full, this discount is of no value to you. Additionally, if you don’t have a used car to trade in, you won’t get any benefit from the trade-in subsidy. In the end, a consumer who doesn’t have a used car and plans to pay in full for the basic model might only receive a real discount of 20,000 to 30,000 yuan, with the remaining amount being mere “digital discounts” created by the car company.
When shopping for a car, don’t just listen to the salesperson’s total discount figure. Ask first: Can all these perks be converted into cash to directly reduce the car price? If not, which ones can you get without any additional conditions? This will quickly help you filter out the exaggerated parts of the discount.
2. Why do car companies use perks instead of simple price cuts?
It’s not that they’re bad at math; the cost of direct price cuts is too high for them to afford right now:
- First, car companies are really losing money. The average gross profit margin in the new energy industry is only 12%-13%. Selling a 200,000 yuan car results in a net profit of just over 20,000 yuan. Even giants like Tesla have seen their automotive profit margin drop from 19% to 16% in the second quarter of this year. If they directly cut the price by 30,000 yuan on all models, they would lose money on every sale, and the more they sell, the more they’d lose. No company wants to take that risk.
- Second, they’re concerned about customer complaints from existing car owners. If a customer bought a car for 300,000 yuan last week and then sees a price cut announced this week, they might protest. But since the official price remains unchanged, existing car owners will at most complain about missing out on the perks, rather than feeling that their car’s value has decreased.
- Third, these discounts also help offset rising costs. In 2026, the purchase tax on new energy vehicles will change from being waived to being halved, meaning consumers will have to pay an additional 10,000 yuan or more. Car companies prefer to offer perks to quietly pass on this cost increase without raising prices directly, thus maintaining a good public image.
3. Tesla’s price cut is not about competing for market share; it’s about clearing inventory
Many think Tesla is trying to outcompete domestic car companies with another price cut, but this time their move is quite cautious. The discount is only available on existing vehicles and will expire on September 30. Customized or newly produced vehicles won’t receive any discount. This is a different strategy from previous years when discounts applied to all models for a longer period.
The real reason is practical: Tesla’s sales in China have decreased by 12% in the first seven months of this year, and the Model 3’s sales have dropped by a third. A significant portion of its market share has been taken by domestic car companies. About 70% of the cars produced in its Shanghai factory are now exported. During the third quarter, there’s a gap in overseas orders, so Tesla needs to produce and sell these cars domestically to avoid further losses. This price cut is mainly aimed at clearing inventory for the third quarter, with no long-term intention of lowering prices.
4. Why won’t there be another nationwide price war like in 2023?
The 2023 price war was intense, with car companies directly reducing prices by tens of thousands of yuan, allowing consumers to save significant amounts. This year, however, the situation is different. According to the China Association of Automobile Manufacturers, only 10 car models offered discounts in August, compared to 13 last year. The discounts were mostly on high-priced models over 250,000 yuan, with an average reduction of 45,000 yuan, and all were limited to a one-month period and only applicable to existing vehicles.
Car companies have learned that a nationwide, bottomless price war will only harm everyone. The current approach of targeted discounts has several advantages: it only affects inventory that’s piling up, doesn’t affect the prices of newly produced cars, doesn’t encourage consumers who are waiting to buy to wait longer for even lower prices, and doesn’t disrupt the long-term pricing structure of the entire product line. In other words, the current price war has evolved from a competition of who can lose the most money into a more strategic approach that takes into account inventory levels and consumer needs.
5. What should ordinary consumers do to avoid being misled?
- Don’t be fooled by headlines like “total discount of X yuan.” First, filter out the perks you won’t use (such as seats or decorations) and ask if they can be converted into cash to reduce the car price. If you plan to pay in full, ask if the zero-interest loan can also be converted into cash and discard any unnecessary services.
- Check the conditions for each discount: Are the perks only available on unsold, high-end models? Do you need to buy the car by a certain date to qualify for the discount? Don’t pay a deposit only to find out you don’t meet the requirements.
- There won’t be another nationwide price cut like in 2023. Car companies’ profits are already very low, so any future discounts will likely be small, aimed at boosting sales at the end of the year. If you need a car urgently, take advantage of the available discounts; there’s no need to wait for months just to save a few thousand yuan.