Chinese electric cars flood Australian market, benefiting consumers but raising concerns

Chinese electric cars flood Australian market, benefiting consumers but raising concerns After months of research, Awadhesh Prasad settled on an EV from the Chinese automaker BYD. (ABC News: Mike Barnett)

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."

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-headquarted company suffered through some supply chain issues.

Scott Dwyer from the University of 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 30 million new energy vehicles a year in China, whereas in Australia, we're at 200,000 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."

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 where 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.

"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."

Political leaders in the US and Europe have raised concerns about Chinese government subsidies unfairly and artificially depressing the price of Chinese EVs, although 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.

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."

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."

  • https://www.msn.com/en-au/money/markets/chinese-electric-cars-flood-australian-market-benefiting-consumers-but-raising-concerns/ar-BB1o2spO?ocid=00000000

Related

Important tax details Aussies need to know

Important tax details Aussies need to know

Money
Vow to taxpayers after $11.9bn GST blow

Vow to taxpayers after $11.9bn GST blow

Money
102 millionaires paid no tax and the richest and poorest postcodes and occupations revealed

102 millionaires paid no tax and the richest and poorest postcodes and occupations revealed

Money
Experts say the Coalition's plan to build nuclear reactors is 'virtually impossible' without taxpayer funding

Experts say the Coalition's plan to build nuclear reactors is 'virtually impossible' without taxpayer funding

Money
Bhutan has long been called the happiest nation on Earth. Here’s what life is really like in the tiny kingdom

Bhutan has long been called the happiest nation on Earth. Here’s what life is really like in the tiny kingdom

Money
David Jones downsizes: Why department stores keep slashing floor space

David Jones downsizes: Why department stores keep slashing floor space

Money
Nobles Nob gold mine to be reopened by Tennant Mining as prices hit record highs in 2024

Nobles Nob gold mine to be reopened by Tennant Mining as prices hit record highs in 2024

Money
How Golden Fleece, Australia's first oil company and biggest restaurant chain, vanished overnight

How Golden Fleece, Australia's first oil company and biggest restaurant chain, vanished overnight

Money