Is the automotive price war coming to an end?
The Xiaomi YU7 has seen a surge in orders, which is not surprising. However, the fact that the locked - order volume exceeded 240,000 units within 18 hours still shocked the automotive industry. After the shock, different car companies had different reactions. Some targeted the overflowing orders and took the opportunity to cut prices to poach customers; others raised prices to confront the competition head - on. After two years of price wars, the entire automotive industry chain seems to have reached its limit. Some interpret the price hikes of some brands as a signal that the price war is coming to an end, while others pessimistically predict that this is just the calm before the storm.
The Xiaomi YU7 Sells Like Hotcakes
Tesla Raises Prices to Confront the Competition
Within 3 minutes, the number of large - scale pre - orders exceeded 200,000 units, and within 18 hours, the locked - order volume exceeded 240,000 units.
This is the achievement of the Xiaomi YU7 after its launch. These figures shocked the entire automotive industry. Li Xiang, the CEO of Li Auto, congratulated Xiaomi YU7 on Weibo for creating a miracle in the history of the Chinese and even the world's automotive industry. He Xiaopeng, the chairman of XPeng Motors, described these figures as a "myth". Even Lei Jun, the founder of Xiaomi Technology, was a bit incredulous, saying that the popularity of the Xiaomi YU7 had exceeded his expectations.
After the shock, rival companies had a sleepless night. They have no experience in dealing with a powerful competitor like Xiaomi, which doesn't play by the rules of the automotive industry.
▲ The Xiaomi YU7 in a Xiaomi car experience store. Photo / Visual China
Soon, some companies took action. Within less than a week after the release of the Xiaomi YU7, various car companies responded quickly. Brands such as NIO, ZEEKR, IM, Avatr, and JIEJING started to "poach" customers from Xiaomi. They offered compensation measures for Xiaomi YU7 locked - order users, reimbursing the deposit that the car owners had paid for the YU7 in the form of cash or points.
Meanwhile, many car companies played the price - cut card. As of the time of publication, car companies such as Li Auto, JIEJING, and smart have all launched various degrees of preferential measures. For example, JIEJING offers a cash subsidy of 20,000 yuan for all models, and Li Auto's L6 launches a 5 - year zero - interest car - purchase plan, with a minimum daily payment of only 99 yuan.
There are also those who do the opposite.
On July 1st, the long - range version of the Tesla Model 3 and the refreshed long - range version of the Model Y were upgraded. Among them, the range of the Model 3 long - range version increased from 713 km to 753 km, and the 0 - 100 km/h acceleration time improved from 4.4 seconds to 3.8 seconds. At the same time, the price was raised by 10,000 yuan.
Many people are puzzled. With the Xiaomi YU7 so popular, why did Tesla choose to confront it head - on?
On the day when Tesla officially announced the price increase, Mei Ren Auto visited several Tesla stores in Beijing. There were not many people in the stores on weekdays. The expiration date of the discounts on the signboard still remained on June 30th, and the new price - increase notice hadn't been posted yet.
▲ A Tesla store, Model 3. Photo / Mei Ren Auto
A Tesla salesperson told Mei Ren Auto that the Model Y had a price increase when it was refreshed at the beginning of the year, and this price increase of the Model 3 was a normal price adjustment. The main reason was that the price of imported raw materials used in the battery had increased, so the price of the whole vehicle also increased accordingly. This time, the Model 3 was upgraded in both range and power, which was equivalent to having an acceleration package worth 14,100 yuan as standard, but the price only increased by 10,000 yuan.
As for why the price increase was announced at this time, the salesperson explained that "the price increase was a foregone conclusion. We just wanted to avoid the peak popularity period of the 26th (the launch of the Xiaomi YU7), so we chose to announce it today (July 1st)."
Currently, the Xiaomi YU7 is selling well, but Tesla is "going against the current" by raising prices. Although the models with price increases are not direct competitors of the YU7, it sends a signal to the outside world that the YU7 will not affect the sales of the Model Y. A Tesla salesperson believes that the customers of the Model Y and the Xiaomi YU7 are not the same group. Even some customers who have bought the Xiaomi YU7 came to the Tesla store to look at cars. Due to the long delivery time of the YU7, they chose the Model Y, which can be picked up faster. "The same situation also occurred when the Xiaomi SU7 was launched."
However, despite the price increase, the 5 - year zero - interest preferential policy will continue until July.
Consumers who are interested in buying a Tesla have also reacted indifferently, as if they have gotten used to Tesla's "routine" of price adjustments. Indeed, many prospective car owners believe that the long - range version of the Model 3 has significant upgrades in power and range. Paying an extra 10,000 yuan for an acceleration package worth 14,000 yuan is not a bad deal. Some old car owners even feel "stabbed in the back".
The "High - Interest and High - Rebate" Policy Is Suspended
BBA May Raise Prices Across the Board
Tesla is not the only one raising prices.
On social media, there are many similar remarks like "Domestic cars are raising prices across the board. The automotive industry is going back to the price system of two years ago."
Recently, Mei Ren Auto has detected similar signals from 4S stores of luxury brands such as Audi and BMW: Currently, all models are still on sale at discounted prices. However, with the suspension of the bank's "high - interest and high - rebate" policy, multiple brands' full - line models will face price increases. For example, the price of the BMW 3 Series will increase by about 8,000 yuan, the BMW 5 Series is expected to increase by 10,000 yuan, and the BMW X5 will increase by about 15,000 yuan.
▲ A BMW 4S store. Photo / Mei Ren Auto
Take the new BMW X3 as an example. Currently, the quoted price for the bare car is 338,000 yuan, and it may increase by about 20,000 yuan in the future. For a mid - to high - end configuration Audi A3 model, which currently sells for about 160,000 yuan, the price may increase by 7,000 to 8,000 yuan. A car owner who inquired about the price of a Mercedes recently found that it was about 50,000 yuan more expensive than before.
The "high - interest and high - rebate" policy means that in order to get more loan orders and customer traffic, banks cooperate with car dealers. They provide car - purchase loans to car owners and at the same time return high commissions to dealers. Dealers use this rebate to subsidize the car price and offer more favorable prices at the terminal. At the same time, consumers get real - price discounts, and the sales volume of 4S stores naturally increases. This is also the reason why many 4S stores strongly recommend that car owners buy cars on loan, because "it is cheaper to buy a car on loan than to pay in full."
The "high - interest and high - rebate" policy added fuel to the fire of the price war in the automotive industry and became a bargaining chip for car companies and dealers to compete on low prices. As the sentiment of "anti - involution" and "anti - price war" in the industry has become stronger, since June, banking regulatory authorities or industry associations in many places have successively issued notices or self - regulatory conventions, strictly prohibiting banking institutions from expanding business through "high - interest and high - rebate" methods. Subsequently, many banks announced the suspension of the "high - interest and high - rebate" policy for personal car loans.
With the tightening of bank loan policies and the cut - off of financial subsidies, consumers need to pay more "real money".
Some car owners who have paid a deposit have even had their deposits returned due to the price increase after the end of the policy.
Qin Li has been a Mercedes salesperson for eight years. Regarding this price increase, he gave a rather "neutral" statement: "It's not really a price increase. It's just that we are now more inclined to full - payment purchases." In his opinion, this is a price return after the "subsidy carnival" in the entire industry has ended.
Qin Li admitted frankly: "Actually, 4S stores have been losing money since last year. At that time, we could still hold on with bank subsidies. Now that the banks are no longer providing subsidies, we can only rely on ourselves and persuade customers to place orders early."
▲ An Audi 4S store. Photo / Mei Ren Auto
For consumers who are already used to price cuts, this "price adjustment" is hard to accept.
Li Yiran, an engineer at a large company in Shanghai, decided to buy a BMW i5 after several months of comparison. He had just negotiated the price with the salesperson when he was notified the next day that the price had increased by 11,000 yuan. In anger, he cancelled the order without hesitation, saying, "I don't have to buy a BMW. I can also consider Mercedes or Cadillac."
In contrast, Xu Tao was luckier. He placed an order before the end of the "high - interest and high - rebate" policy. At that time, he hadn't heard the news about the end of the relevant bank policy. He just regarded the "price increase" mentioned by the salesperson as a sales tactic. Now, after hearing about this change, he is very determined, saying, "If it were now, I definitely wouldn't buy it."
Consumers like Li Yiran and Xu Tao are sensitive to price fluctuations, have limited brand loyalty, and are more inclined to take price as the first factor when buying a car. After learning that the price may increase in the future, more people choose to hold off on buying and wait and see. At least for the next one or two months, they are not in a hurry. "The money is in our own hands. Only those who sell cars will be anxious."
In car stores, the customer flow and transaction volume have been significantly affected. Some salespeople have complained online that the 4S stores have been empty since the end of the "high - interest and high - rebate" policy, and they "don't know how to quote prices to customers anymore." So they have to change their strategy and persuade potential customers that "a car is a consumer good. Don't always expect to get a bargain. Buy it early and enjoy it early."
There is no new policy yet, and the automotive market is as difficult as the current summer heat. Dealers are collectively in a state of confusion.
The only certainty is the price increase. An Audi salesperson revealed that the bare - car prices of all models will be adjusted in the future, but the specific time is not clear. "Maybe around July 15th."
Is the Price War Coming to an End?
With the end of the "high - interest and high - rebate" policy and the collective plan of BBA brands to raise prices, do these signals mean that the price war is finally over?
Going back to January 2023, Tesla China announced that the prices of the Model 3 and Model Y had been lowered to the lowest levels in history at that time. Perhaps no one could have predicted that this would be the starting point of a long - lasting price war. One month later, BYD's Qin PLUS DM - i first lowered its price to less than 100,000 yuan, officially kicking off the era of "same price for gasoline and electric cars". In March, Hubei Province launched government - enterprise subsidies, and the Dongfeng Citroen C6 offered a maximum subsidy of 90,000 yuan. By then, the smoke of the price war had spread throughout the industry. Subsequently, more than 30 car companies followed suit, covering both fuel - powered and new - energy vehicles.
The price war that lasted for a year did not stop. Tesla fired the first shot of price cuts in 2024 again, with a maximum reduction of 15,500 yuan. In February, BYD continued to follow up. The honor version of the Qin PLUS DM - i was launched, with a starting price of only 79,800 yuan. In just one year, the era of "same price for gasoline and electric cars" has passed, and a new era of "electric cars are cheaper than gasoline cars" has arrived.
▲ The honor version of the BYD Qin PLUS DM - i. Photo / Visual China
The latest round of price cuts was in May 2025. BYD adjusted the prices of 22 models, with a maximum reduction of 53,000 yuan. Subsequently, brands such as Geely, Leapmotor, IM, and SAIC - GM followed suit. In the terminal market, after various subsidies, you can buy a BYD for less than 50,000 yuan.
Amid the continuous price - cut sprees, consumers are happy, but those in the automotive industry chain are struggling.
The price system has been disrupted, user trust has been lost, the sales - channel system has collapsed, and services have been shrunk. The entire automotive industry chain is in jeopardy. A senior dealer sighed helplessly: "We are not selling cars. We are using