Chinese electric vehicle makers, including Nio Inc (NYSE:NIO) and Li Auto Inc (NASDAQ:LI) are intensifying competition by reportedly extending financial incentives to 2025.

The automakers are following the lead of industry giants Tesla Inc and BYD Company in offering substantial discounts and attractive financing options to lure buyers in the world’s largest automobile market, according to a report from Reuters.

Last week, Li Auto said it would provide cash subsidies of 15,000 yuan (about $2,055) per vehicle, coupled with a three-year zero-interest financing scheme, per the report.

Similarly, Nio introduced a comparable zero-interest loan program for its Nio- and Onvo-branded EVs.

Li and Nio clocked a 16.2% and 72.9% year-on-year jump in sales, respectively, in December.

The report further notes that BYD, a prominent player in the local market, has been providing discounts of up to 11.5% on its hybrid and electric models since December.

The Chinese EV maker marked about a 50% year-on-year jump in the sales of new energy passenger vehicles in December.

The report further notes that Tesla has extended a 10,000 yuan discount on Model Y loans until the month’s end.

These moves come amid a protracted price war for years and show no signs of abating.

Last year, China expanded its stimulus program to subsidize purchases of passenger vehicles and consumer electronics.

Car industry margins in China averaged 4.4% from January through November, down from 5.0% in 2023.

China is expected to sell over 12 million EVs in 2025, doubling 2022 figures, while traditional car sales may drop below 11 million.

To further stimulate the economy, Chinese authorities reportedly plan to issue 3 trillion yuan in special treasury bonds in 2024. Some of these funds are expected to bolster subsidy programs aimed at encouraging consumer spending on vehicles and other goods.

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