March of the EVs: Cheap Chinese cars to flood Australian roads

What’s driving the surge? Chinese manufacturers such as BYD and SAIC Motor have built up their factories over the last decade and collectively can now manufacture up to 40 million vehicles a year. The country is responsible for about 60 per cent of total global EV production, and foreign companies Tesla and Volkswagen are also using Chinese factories to produce a growing percentage of their vehicles.

Australia in many respects is a prime market for China’s automotive export efforts, according to Tony Weber, chief executive of the Federal Chamber of Automotive Industries, the nation’s peak automotive body.

While US President Donald Trump has made a public pledge to “tax Chinese cars out of the US”, that’s not the case locally.

“We have a free trade agreement. There are no tariffs in this country and no barriers, so we are getting more competition, more high-quality products at low prices,” Weber said in an interview.

“The Chinese industry has focused heavily on pure EV technologies, so they have a competitive advantage in terms of both technology and pricing on batteries, and the scale of a domestic market to support it.

“It’s clear more brands are going to be coming into the Australian market, and there’s going to be a lot more competition amid ongoing cost-of-living pressures.”

David Smitherman is the chief executive of EVDirect, the sole Australian distributor for BYD, which has a stated goal of unseating Toyota as Australia’s most popular car brand by 2030. BYD is already Australia’s third-best selling Chinese brand and increased its sales by 64.5 per cent last year.

BYD on Thursday launched a new medium-sized SUV, the Sealion 7, which retails for around $55,000, undercutting its rival Tesla Y by close to $10,000. Smitherman is confident the Sealion 7 will be BYD’s best-selling electric vehicle in Australia. Next month it’s launching the BYD Dolphin, a compact SUV that will be Australia’s cheapest EV at $29,990.

“Australians are savvy, right?” Smitherman said. “They’re looking for something that’s new and different, that’s advanced in technology and looks beautiful as well, and that’s what we’re delivering and where we’re seeing that sales momentum come through.

“BYD is now a global powerhouse – it’s the fifth-largest car brand in the world and it’s a brand that has been around for 30 years, even if it’s still new in Australia. It’s a significant company, it’s not a start-up, and we now have 30,000 vehicles on Australian roads.”

In Australia, BYD and other Chinese brands such as MG are undercutting their European and American rivals in some cases by tens of thousands of dollars, making them a difficult option for many to resist.

For Smitherman, those cheaper vehicles have been possible, at least in BYD’s case, due to the scale of its operations.

“The global scale of BYD is significant,” he said. “And it’s the vertical and horizontal integration of the supply chain as well. If you look at an EV, the battery is a big cost component, and BYD makes the battery. And for us, it’s all the simplicity of the line-up. We don’t have thousands of models currently in Australia, it’s a very simple line-up, and other brands have 40 or 50 different models.”

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The Guangzhou-based XPeng is another manufacturer busy making inroads. Jason Clarke is the chief executive of TrueEV, the importer and retailer for new brand Xpeng in Australia. Clarke said that in China, EV adoption has hit close to 50 per cent of all cars, and that market therefore has maturity with EVs that Australians find surprising.

“When these cars come to Australia, consumers are almost immediately taken aback by the high level of design and high quality of manufacturer and reliability that they see,” he said.

“The feature set is also very refined in many cases … It’s a contrast to expectation, so curiosity is high.”

In what is now a fiercely competitive market, Clarke said that XPeng’s focus on AI and low-altitude mobility – aka flying cars – set it apart from other Chinese EV brands.

“When compared to traditional automakers like Toyota and Ford, the gap is even more pronounced,” he said.

“Legacy ICE brands face the immense challenge of overhauling decades of processes, supply chains, and corporate culture to meet evolving consumer expectations.

“XPeng, by contrast, was built from the ground up with EV and smart technology at its core. Even the Volkswagen Group, recognising this shift, has invested around $US700 million in XPeng to leverage its technology.”

Despite the obvious appeal of lower prices and sophisticated technology, XPeng and its rivals will have to navigate some speed bumps as they move to steal market share away from household names. The US government is planning to ban Chinese and Russian software from its electric vehicles from 2027 because of alleged risks to national security, a situation Prime Minister Anthony Albanese has said he’s monitoring.

Foreign exchange rates have lifted costs, and industrial disputes at Australian ports have, in some cases, delayed shipments. There are also concerns that tariffs and an unpredictable geopolitical environment may force prices upwards.

Clarke said that some of those external factors, along with launching a new, relatively unknown brand has been challenging. In a bid to reassure consumers, XPeng has extended its factory warranty to 10 years for both the battery and the vehicle, and has partnered with Ultra Tune for roadside assistance and servicing for new car buyers.

“We’re here for the long haul in Australia with an ambitious vision to become a top player in the market,” he said. “We aim to be among the top five pure EV brands in Australia within the next three years. We know this requires significant effort, but we have absolute confidence.”

There is certainly no shortage of ambition from the Chinese manufacturers, with XPeng’s X2 model putting its own spin on the “flying car” genre.

The X2, which is likely to be priced at around $200,000, is an electric vertical take-off and landing “flying car” that offers up to 30 minutes of flying time at a top speed of 130 kilometres per hour. Owners will need a pilot’s licence – rather than just a simple driver’s licence – to eventually fly one.

“The next iteration of the X2 is the ‘land aircraft carrier module flying car’ which we hope to have later this year on display at our Sydney flagship experience centre at Mascot,” TrueEV chief executive Jason Clarke said.

“We hope to one day be in a position where these vehicles are able to operate in Australia too.”

Dan Caesar, chief executive of Everything Electric Australia, an upcoming electric vehicle expo, said that the biggest elephant in the room with battery EVs to date had been the sticker price. No longer.

“Some legacy manufacturers have staunchly refused to release affordable EVs for fear of undermining their sales of combustion models. China has no such qualms. Its strategy is predicated on the fact that the middle classes with limited disposable incomes are clamouring to climb into electric cars if the price is right,” he said.

“Nowhere is that more obvious than in Australia.”

Caesar, who is organising the Everything Electric Australia show in Sydney next month, said that legacy manufacturers are now facing an enormous challenge from China-made cars.

While many of the new vehicles are technically impressive, NRMA’s Khoury said he would still urge new car buyers to still do their own research when comparing after-purchase features such as warranties and servicing.

“Australians are definitely being attracted by the cheaper makes and models that are coming into the country, and they’re not just cheaper, but the range of some of these new vehicles is getting better as the batteries get better,” he said.

“But we don’t want to lose sight of the safety ratings of these vehicles. We always tell Australians to buy five-star ANCAP safety rated, or whatever the international equivalent is, and be aware of the after-purchase factors like warranties, availability of parts and servicing.”