Chinese EV makers gain ground in Australian market with surging sales, tax benefits

Chinese EV makers gain ground in Australian market with surging sales, tax benefits

SYDNEY (Reuters) - While Tesla is greatly benefiting from surging electric vehicle (EV) sales in Australia, it's the Chinese manufacturers in the non-premium end of the market that pose the biggest threat to incumbent automakers like Toyota and Ford. Since coming to power in 2022, Prime Minister Anthony Albanese's government has aggressively promoted EV adoption as part of the country's plans to cut down on emissions, a change that came after a decade of weak climate action under conservative leaders.

That has created a powerful tailwind for electric car demand. EVs accounted for 7.2% of Australian new car sales in 2023, up from 3.1% a year earlier, data from the Federal Chamber of Automotive Industries shows. Chinese EV makers are bringing new models to the market in droves. EV giant BYD, which entered the market in 2022, climbed nearly six times to more than 12,000 vehicles last year and now has 14% of Australia's EV market share, second to Tesla's 53%, data from the Federal Chamber of Automotive Industries shows.

"The opportunity is very clear," said David Smitherman, chief executive at EVDirect, BYD's distributor in Australia. "We need to now get into the mainstream market because we've sold to the early adopters and the passionate EV purchasers." BYD will add two SUVs and a pickup truck to take its product lineup in Australia to six this year, Smitherman said. EVDirect will also open 30 more dealerships in the next 18 months for a total of 55 and has embarked on fleet sales to companies like Uber. Chinese state-owned SAIC Motor will launch three new models this year under its MG brand, including the MG3 plug-in hybrid and MG Cyberstar electric roadster, taking its EV/hybrid product lineup in Australia to five. Incumbent automakers are also looking to up their game. Ford has two electrified vehicles in the Australian market and another three on their way, according to a company spokesperson. Toyota, which sells several hybrids in Australia, has just launched its first electric car there.

Though it is a relatively small market on a global scale, Australia is attractive to Chinese automakers as it doesn't have a car manufacturing industry and is seen as an unlikely market to introduce protectionist trade barriers. Tensions abound in other key markets where Chinese EV makers benefit from state subsidies, while the U.S. has launched an investigation into whether Chinese-made cars could be used to spy on Americans. But relations between Australia and Beijing have warmed after years of tensions, with both sides agreeing to expand cooperation. Albanese's government has not given any signs it is worried about cybersecurity risks posed by Chinese cars, Australia's Department of Foreign Affairs and Trade declined to comment on the matter. To spur EV demand, the government has introduced tax exemptions for EV car leasing/purchase agreements for some consumers through their employers. The country's three most populous states, which are home to Sydney, Melbourne, and Brisbane, have also set goals for EVs to account for 50% of all new car sales by 2030, giving generous rebates on EV purchases and investing heavily in building charging stations.

Expectations are high that EV demand will continue to surge, although forecasts vary. PwC estimates half of Australia's new car sales will be EVs by 2027. Fitch Ratings predicts 18% by 2032. Mark Adamson, a 61-year-old TV director in the state of Queensland, gained A$6,000 (A$3,900) off the A$54,000 retail price of his extended range BYD Atto 3 SUV through state government rebates and then BYD offered a discount of roughly A$2,000. "I figured why not give it a go? It's sort of really worth doing and I have excess solar at home so I'll mainly charge from at home, so it makes it a no-brainer in a lot of ways," he said. In Queensland, state government rebates alone mean that an Atto 3 can cost less than the gasoline-engine RAV4 crossover from Toyota, a comparable model.

For Sydney union organiser Peter Alley, 63, who drives out once a week to see family who live 370 km away, it was the need to cut down on gasoline costs near record highs that persuaded him to switch from a 2008 Volkswagen diesel van to an Atto 3. He now spends about A$20 per week on charging instead of A$130 a week on fuel.