Cheaper Chinese electric cars are making their way into Australia, but it's not all good news (2024)

Quietly zipping around the streets of Canberra, Awadhesh Prasad's red SUV cuts a striking figure against the dappled autumn light and golden leaves.

He's driving a new Chinese-made electric vehicle (EV), one of thousands flooding the Australian market in recent years.

Buying it wasn't an easy choice — he weighed up his options for months, worrying it wouldn't be possible within his budget.

But as China financially backs its manufacturers, its EVs are fast becoming an affordable option and beating out industry leaders.

Late last year, Chinese automaker BYD surpassed Tesla as the biggest manufacturer of EVs in the world, and they've been neck and neck for the top spot based on quarterly sales ever since.

And now, even though more than 80 per cent of EVs sold in Australia, including Teslas, are already manufactured in China, Chinese-owned companies are starting to carve out their position in the market.

After a lot of research, and on the advice of family, Dr Prasad decided he wanted an SUV to take on regular trips to Melbourne and to be more comfortable as he and his wife got older.

"Originally when I started investigating the option of buying a (new) car we started with the petrol car," he said.

"But when I started investigating the electric car, I found this particular SUV — the BYD — far, far better than compared with the Tesla.

"The Tesla was overly priced in my view, (and) there is not much difference in functionality between Tesla and BYD — so that's the reason I landed on this one."

Cheaper Chinese electric cars are making their way into Australia, but it's not all good news (1)

Tesla is still the market leader in Australia — accounting for a little more than half of EV sales last year — but BYD is closing in, seemingly because it can offer a lower price point.

BYD beat Tesla in monthly sales for the first time in January, as Elon Musk's US-headquartered company suffered through some supply chain issues.

Scott Dwyer from the University of Technology Sydney's Institute for Sustainable Futures said this increase in Chinese-manufactured EVs was benefiting Australia.

"The Chinese are leading the world in terms of the technology and the advancements in EVs," he said.

"They sell eight million new energy vehicles a year in China, whereas in Australia, we're at around 100,000 a year.

"So, the increase in new products coming from the Chinese market to Australia gives consumers more choice and brings the technology into the country that people can then use to decarbonise their own transport emissions."

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Sales of battery EVs in Australia grew to represent 9.5 per cent of new car sales in March, up from 6.8 per cent a year earlier.

China saw the future in EVs

EVs are a key part of Chinese leader Xi Jinping's vision for the future of his country's economy, at a time when it is struggling to continue the enormous growth of previous decades.

In April, China exported 115,000 new energy vehicles, 41,000 of which were BYDs, according to the China Passenger Car Association.

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"About 15 years ago, when nobody else was doing anything about batteries, China saw the opportunity," said Kwangyin Liu, a journalist at Taiwan's Commonwealth Magazine who specialises in cars, climate change and energy.

"[It realised it] would never be able to compete with Japan or Germany … in the field of internal combustion engine cars.

"So, China decided to go all in on EVs and the raw materials for batteries, which is lithium-ion."

Ms Liu said it was clear they made the right investment, with the quality of Chinese EVs also markedly improving since.

"When Chinese EVs just started they got a pretty bad rap, they (were) a really low quality, they (used to) catch fire really easily," she said.

But now they've improved — as evidenced by her colleague's experience comparing the Chinese EVs to German brands at an auto show in Munich last year, she said.

"People will say that they even have better value for money compared with German brands," she said.

"They have very similar specifications, and functions, sometimes even better, especially when it comes to digital function.

"But they come at a maybe 20 per cent or 30 per cent lower price … than German brands."

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Political leaders in the US and Europe have raised concerns about Chinese government subsidies unfairly and artificially depressing the price of Chinese EVs, but Chinese Commerce Minister Wang Wentao in April attributed their success to innovation, competition and effective supply chains.

"The accusations of 'overcapacity' by the United States and Europe are groundless," a statement from the ministry said.

Chinese subsidies spell good news for Australia

But while BYD is picking up speed in Australia and Chinese brand image is improving, governments in the US and Europe are growing increasingly sceptical of China's EV companies.

In mid-May, the Biden administration announced it would be putting tariffs on about $US18 billion ($27 billion) worth of Chinese imports, including increasing the rate on EVs from 25 per cent to 100 per cent — accusing China of "flooding global markets with artificially low-priced exports".

China strongly opposed the tariffs, saying the move would "seriously impact the atmosphere of bilateral cooperation".

"The increase in … tariffs by the United States contradicts President Joe Biden's commitment to 'not seek to suppress and contain China's development' and 'not to seek to decouple and break links with China'," the commerce ministry said in a statement.

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Meanwhile, the European Commission is investigating Chinese government subsidies, which the Europeans worry might unfairly disadvantage their manufacturers.

"Typical markets for exporting — Europe and the US — have really started to introduce different trade barriers and make it difficult for Chinese EV importers," said Dr Dwyer.

"So, the Chinese autos are looking and saying, 'Well, [Australia] is an attractive market. There's still incentives and subsidies that support electric vehicles … [and] there's not such great choice for Australian consumers due to a bit of a vacuum that's existed here.'

"And these factors are all conspiring to make Australia look quite an attractive market, given we sell 1.1 million cars a year, and the uptake of EVs is still growing."

Without a domestic car manufacturing industry, the issue of Chinese government subsidies is less of a concern for Australia.

Benjamin Herscovitch from ANU's School of Asia and the Pacific said this ultimately presented an opportunity for Australian consumers.

"I think from a national point of view … it's probably on balance, a good thing that China is subsidising EVs because it means cheap, abundant accessibility to high-quality EVs," he said.

"It's very clear from all of the messaging that we get from Washington on a bipartisan basis that the United States sees itself locked in existential competition with China and that's spilling out into the technological domain.

"[But] the United States knows that it needs to keep Australia on side in terms of its military-strategic competition with China, and I don't think they would want to burn political and diplomatic capital in Canberra by trying to press-gang Australia into following its lead on a broader market restriction for Chinese EVs."

Risks persist despite benefit

While Chinese cars are presenting a more affordable price point, Australia, like many countries, has learnt in recent years that having all your eggs in one basket can cause problems.

"If you rely on one geographic concentrated area for big major products like EVs, that is always very risky in terms of supply chains, in terms of the production capabilities," said Marina Zhang from the Australia China Research Institute.

"Any supply chains are subject to external shocks, let's not forget about COVID in 2020, the whole world was struggling with breakdowns of supply chains for some essential suppliers, so that is always a danger."

Cheaper Chinese electric cars are making their way into Australia, but it's not all good news (6)

While Dr Parsad said he was happy with his purchase, his wife's initial reluctance to buy a car so new to the market came to fruition when an early issue took about a month to fix.

"Her concerns were related to the brand reputation of BYD because, compared to Tesla, BYD has been in the market only a couple of years," Dr Prasad said.

"And the other reason was that if something goes wrong with the car, it will not be very easy to fix quickly and unfortunately that concern came largely true."

The ABC reached out to BYD in Australia a number of times to request an interview.

Dr Zhang said the greatest risk for Australia becoming reliant on Chinese-designed and made EVs was not supply issues, but geopolitics.

"Increasingly, EVs are all equipped with not just electricity, but also so-called connectivity to technologies … that can potentially collect user data," Dr Zhang said.

"And [it's] whether the Australian government will be happy for Chinese EV makers to collect that data [or not]."

Earlier this year, the US launched an investigation into the national security risk Chinese smart cars might pose.

Beijing responded by urging the US to respect the principles of fair competition, to "stop overstretching the concept of national security, stop its discriminatory suppression of Chinese companies and uphold an open fair and non-discriminatory business environment".

Dr Herscovitch said work was just beginning on how best to navigate the issue of data collection.

"What those protections for Australian consumers might look like remains to be seen, but one can imagine that there might be things put in place along the lines of requirements of data localisation in Australia," he said.

"I think if you're looking at it from the point of view of the appeal of low-cost, high-quality EVs for Australian consumers, and if you're looking at it from the point of view of Australia's long term, challenging objective of transitioning to net zero, you don't want to be in a position of shutting out Chinese EVs from the Australian market in general.

"What you want to do in all likelihood is put in place the necessary security mitigation measures to ensure that Australian consumers are protected and that Australians can safely import and use Chinese-made EVs without being subjected to undue security risks from either Chinese technology companies or the Chinese government."

Editor's note, June 12, 2024: A previous version of this story included a line that read 30 million new energy vehicles were sold in China every year compared to around 200,000 in Australia. Those figures were corrected to 8 million and 100,000 respectively.

Posted, updated

Cheaper Chinese electric cars are making their way into Australia, but it's not all good news (2024)

FAQs

Why are Chinese EVs so cheap? ›

Thanks to hefty government investment, cheap labor and their country's robust reserves of key minerals, Chinese automakers have developed a wide range of EVs that are of comparable quality to anything made in the United States but often sell for a fraction of the price.

Why Chinese car sales are exploding in Australia? ›

Chinese cars are surging up the sales charts in Australia, offering consumers more affordable alternatives to once popular offerings from Japan, Korea, and Europe.

Why are Chinese electric cars not sold in the US? ›

Chinese EVs are cheap. For America, that could be a problem American drivers want cheap EVs. Chinese automakers are building them. But you can't buy them in the U.S., thanks to tariffs in the name of U.S. jobs and national security.

Why does Australia not want electric cars? ›

More than half of new car buyers in Australia don't want electric cars due to price and charging concerns, according to a recent study. Australians think electric vehicles (EVs) are too expensive to buy and charging infrastructure is too limited, a study has found.

Are any Chinese made cars sold in the US? ›

No new cars built and sold by Chinese automakers are available in America today. Several automakers serving the American market have deep relationships with China. Volvo, for instance, is owned by Chinese automaker Geely.

Why does BYD not sell in the USA? ›

According to analysts, even if BYD did want to start selling its cars in the US, a combination of geopolitical challenges and weak demand would leave it facing an uphill battle.

Why are cars so expensive in Australia compared to America? ›

Why cars are so expensive in Australia as compared to US/UK? Australians have to import all vehicles now, thus there are costs due to: Importation costs and shipping costs. Everybody has to make a living along the way.

What is Australia's number one selling car? ›

1. Ford Ranger - 63,356. After 28 years, Ford finally returned to the top of the Aussie sales charts in 2023 with the new-generation Ranger, which knocked the Toyota HiLux from its perch after seven years thanks in large part to its gutsy diesel V6 and class-leading homegrown platform.

Are electric car sales declining? ›

California has been at the forefront of a booming electric vehicle market, but recent trends show signs of fatigue. EV sales significantly declined in the latter half of 2023 for the first time in over a decade.

Why doesn t Japan make electric cars? ›

Because the Japanese know that EV infrastructure is something that will not be created overnight and the Big-Oil will not let EV succeed for the next 50 years at least. Hybrid is the best solution that is acceptable to the oil industry and that itself on paper meanas a 30-40% reduction in oil imports/production.

How much will a Chinese electric car cost? ›

The car, launched last year by Chinese automaker BYD, sells for around $12,000 in China, but drives well and is put together with craftsmanship that rivals U.S.-made electric vehicles that cost three times as much. A shorter-range version costs under $10,000.

Can I import a Chinese electric car to USA? ›

US battery electric vehicle imports

The United States doesn't currently import Chinese BEVs at scale largely because it places a 27.5 percent tariff on Chinese-made cars, along with other restrictions. Still, this tariff may not ultimately prevent Chinese autos from reaching the United States.

Why electric cars are not the future? ›

While bigger batteries allow drivers to travel farther between charges, they also make the cars heavier, more dangerous, more expensive, and worse for the planet. The "range anxiety" that has resulted in massive batteries is another reason EVs don't work as a replacement for gas cars.

Why are electric cars still bad for the environment? ›

Electric vehicles are sometimes called "zero-emission vehicles." But the batteries that go into them are not zero-emission at all. In fact, making those batteries takes a lot of (mostly-not-clean) energyand hurts the environment in other ways, a fact that's become common knowledge after widespreadmedia coverage.

Why is a plug-in hybrid so expensive? ›

Purchase price.

Plug-in hybrid cars have a large battery pack and highly sophisticated software and hardware. That has historically led to a higher price tag relative to their conventional and standard-hybrid cFounterparts (unlike PHEVs, standard hybrids can't be plugged in or operate on electric power alone).

Are Chinese EVs any good? ›

Earlier this year, Tesla CEO Elon Musk told industry analysts Chinese EVs are so good that without trade barriers, “they will pretty much demolish most other car companies in the world.”

What is the cost advantage of Chinese EV? ›

Chinese automakers have a notable cost advantage due to lower labour rates, increased scale, healthy government subsidies, and more favourable battery costs (many of the world's EV batteries or components are sourced from China).

Which Chinese EV company is the best? ›

Top 6 Chinese Electric Vehicle Companies
  1. BYD. BYD (Build Your Dreams) became a major player on the EV scene in 2022 when it stepped up its production of EVs by a massive 200%. ...
  2. Geely. ...
  3. Nio. ...
  4. SAIC Motor. ...
  5. XPeng. ...
  6. Li Auto.
May 2, 2024

What are the Chinese made EVs? ›

8 best Chinese electric cars for sale in 2024
  • MG4 EV. 9/10. MG MG4 EV review. Battery range up to 323 miles. ...
  • MG5 EV. 6/10. MG MG 5 EV review. Battery range up to 250 miles. ...
  • BYD Seal. 8/10. BYD Seal review. Battery range up to 354 miles.
May 24, 2024

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