Will your next car be a Chinese EV?

Sam Hawley: Tesla has dominated the electric vehicle market for years, but watch out Elon Musk, because a Chinese model is giving it a run for its money. And the good news is it’s a lot cheaper. Today EV expert Dr Gail Broadbent from UTS on whether that means your next car might be a Chinese made EV. I’m Sam Hawley on Gadigal land in Sydney. This is ABC News Daily.Gail, I see more and more Teslas on our roads. They seem to be everywhere. Australia seems to really like Elon Musk’s electric vehicles, right?

Gail Broadbent: That’s very true. So out of the 100,000 electric vehicles sold last year, 46,000 of them were Teslas and of that total 90,000 were fully electric cars. So he’s got half the fully electric car market and the other 10,000 were plug-in hybrids.

Sam Hawley: Just tell me, Gail, how much does a Tesla set you back these days?

Gail Broadbent: Oh, look, anything from, you know, 70-ish thousand dollars. So, you know, they’re relatively expensive, but they’re not as expensive as the Rolls-Royce electric model, which is over $700,000.It’s astonishing.

Sam Hawley: I’d love one of those, Gail. Wouldn’t you?

Gail Broadbent: Oh, who wouldn’t? I mean, it would be just a dream.

Sam Hawley: Well, there’s some lucky people out there, I gather, that have one of those.

Gail Broadbent: Well, not many.

Sam Hawley: But anyway, look, we know here in Australia, you know, you do see more electric vehicles, that’s for sure, but we do have a lot fewer EVs on our roads compared to nations in Europe, for instance.

Gail Broadbent: Oh, absolutely. Norway is the absolute standout EV market in the world. Last year, 75% of new car sales were EVs. The Norwegian government has had a very long-term commitment to EVs for more than 20 years, and that really provides stability and certainty to the market. Other countries in Europe, there are strong sales. In the UK, EVs are a bit over 20% of the new car market. Germany, 23% of the new car market. But in a lot of the poorer European countries, such as Poland and Romania, EVs don’t sell so well because they’re relatively high-priced compared to what the people can actually afford. And sadly, Australia has about the same level of EV uptake as Romania, so it’s not to do with us being poor.

Sam Hawley: So in Australia, only around 7% of new vehicles are EVs at this point, so well behind a lot of those nations that you’ve just mentioned. But, Gayle, why are we so far behind? Because, as you say, we’re not a poor nation.

Gail Broadbent: No, we’re not a poor nation, and, you know, there’s plenty of people who want to do the right thing, but it’s because of government policy. They haven’t supported them, I have to say, for the last 10 years, really until recently. They haven’t been supporting two things. So people are worried about purchase price and they’re worried about whether there’s going to be a charger if they want to do a long trip away from home. So you’ve got to be able to charge the car, and the federal government hasn’t had much to do with that. And also there was a lot of mistruths about EVs being out there and to dissuade, you know, part of the population that are susceptible to that kind of story. And so that’s put people off. The tax regime also has favoured big, dirty cars, so you can get instant tax write-offs with those vehicles for small business, and that really has transformed the fleet that we see today. There are a lot more utes on the road than there are EVs.

Sam Hawley: The Labor government is now trying to boost EV sales, but it did water down legislation designed to help to do that. Just tell me what it’s proposing now.

Gail Broadbent: The new regulations that they’re trying to introduce are about trying to put a cap on the emissions from all the new vehicles that are sold in any particular year. Let’s say they sell 20,000 vehicles, and the emissions that are coming out of those vehicles are all added up and then divided by 20,000, and that gives them an average per vehicle. Now, if it exceeds the cap that the government has set, then they will get a fine for that. So the whole point of this legislation is to try to encourage those car brands to sell more of the low-emission vehicles and fewer of the high-emission vehicles. It doesn’t mean that they can’t sell the high-emission vehicles, it just means to make up for it, they’ve got to sell more of the low-emission vehicles. So that’s to encourage them to import more models of the low-emission type and to give customers more choice.

Sam Hawley: But as I mentioned, they did water this down somewhat to exempt some really popular SUVs. So why do you think it did that?

Gail Broadbent: In my considered opinion, it’s because some of the brands aren’t ready. They don’t have enough of those low-emission vehicles ready to sell and they got caught short. So the government’s trying to placate them because they want to try and satisfy all stakeholders. But in my opinion, the stakeholders they’re not considering here are the young people who are going to suffer the consequences of climate change. And really it’s up to every single person to do their little bit to reduce emissions so that our young people don’t have a dreadful future.

Sam Hawley: Okay, so they’re trying to appease the car market but you think that’s a pretty bad idea?

Gail Broadbent: Oh, I think so, yes.

Sam Hawley: Alright, so Gail, the government is now trying to turn people off fuel-guzzling cars and at the same time, cheaper EVs are becoming available, aren’t they? Because China’s come up with an EV company, BYD, that outsold Tesla in the December quarter, although it dropped back to second place in the first quarter of this year. But the point is it’s giving Tesla a real run for its money.

Gail Broadbent: Oh, absolutely. And BYD, I’ll give you a bit of background to that first just so you can see where it’s come from, because most Australians won’t have heard of that brand because it’s only been on the market here since 2022. They actually started out by making taxis, so they developed that starting out with taxis, worked out how to make the business profitable. And of course the Chinese government gives a lot of support. They give subsidies to battery manufacturers, they give subsidies to people who are buying electric cars, they give cheap loans to these companies making cars, they provide cheap land for them to make the factories. So there’s been an awful lot of push behind from the Chinese government to make sure that they can dominate the automotive industry, and we’ve seen that. So BYD has made huge inroads into the world market. BYD took a very different view to a lot of car companies. They did what’s called vertical integration. That is they make most of their own parts, so they make 75% of their own parts, so they can control the supply chain. And the reason BYD has been more successful is because they make their own batteries, and they’ve had a long, long experience in doing that, so they’re really, really good at it. And a battery constitutes between 25% and 30% of the price of a new car. So if you can control your prices of your batteries, keep that price down, then that’s going to mean you’ve got a cheaper product. And of course the Chinese government gives a lot of support. They give subsidies to battery manufacturers, they give cheap loans to these companies making cars, they provide cheap land for them to make the factories. So there’s been an awful lot of push behind from the Chinese government to make sure that they can dominate the automotive industry.

Sam Hawley: So, Gail, BYD, it has a very different business model and big backing from the Chinese government, and presumably its EV is quite a bit cheaper than the Tesla, which is, I assume, partly why it’s doing so well.

Gail Broadbent: Oh, yeah. BYD are making cars for less than, or selling cars in Australia for less than $50,000, and that’s a lot cheaper than $60,000, $70,000, $80,000 for a Tesla, depending on what kind you have.

Sam Hawley: Yeah. All right. Well, 12 years ago, Elon Musk, who owns Tesla, of course, was laughing at BYD during an interview with Bloomberg.

Presenter: Tell me why you’re laughing. You don’t see them at all as a competitor.

Elon Musk, Tesla CEO: No.

Presenter: Why is that? I mean, they offer a lower price point.

Elon Musk, Tesla CEO: I don’t think they have a great product.

Sam Hawley: And I don’t think he’s laughing anymore. As you mentioned, Chinese subsidies have really helped BYD to become a big force in the EV car market, but, Gail, not all countries are really happy about that, are they?

Gail Broadbent: Oh, of course not, and the US in particular are not happy about that. What they’ve done is… So no BYDs are sold in the US, and that’s because there’s a 25% tariff on Chinese-made cars, plus an extra 2.5% on all foreign-made cars. So there’s 27.5% tariff on a BYD. So the Americans are really worried about this. They are, however, seen as a security risk, and this is something that they’re really, really concerned about. And this is because of connection of vehicles to the internet and the data collection that goes with it. So, you know, they even have the problem of they don’t want any electric cars going near military establishments because of this problem of the connectivity and the data collection. But certainly they are very, very concerned about the connectivity of cars.

Sam Hawley: Mm, so there’s a security concern there.

Gail Broadbent: Oh, absolutely.

Sam Hawley: So let’s just come back, Gail, to Australia. We don’t have much of a car industry left in this country. Would we, do you think, consider tariffs on these Chinese vehicles? Do we have similar concerns that the US has?

Gail Broadbent: I think that’s a really, really difficult question because if you put on the tariffs on Chinese-made vehicles, you’re going to cut off the supply of EVs at the lower end of the price market. But maybe they’ve got to start looking at regulations concerning the connectivity vehicles and data scraping. I mean, if it were me, I’d be really worried. But again, you know, the cheaper-made vehicles, you know, are you going to cut your nose off to spite your face? And they’re going to have to look really, really hard about how they manage that. And it is a problem, so they’re going to have to work out how to manage it.

Sam Hawley: Mm, so I guess, Gail, the question is, will BYD or other Chinese car manufacturers be able to overtake Tesla on roads in Australia? Are they our future? And then, I suppose, are they the answer to having more EVs on the roads in Australia and for us to catch up with other nations in the world?

Gail Broadbent: Look, utes are really expensive vehicles. They’re given a tax break, and that’s how people can afford them. So maybe they just need to overhaul the whole tax regime. If they’re worried about Chinese-made cars and cheaper-made cars, and recognising that a lot of people don’t want the fancy technology that Tesla offer, maybe they have to change the way they’re thinking. The question about whether you import Chinese vehicles is a question for the government and national security, and I think they’re going to have to think really, really hard about what they want to do. And can we achieve the goals of getting to net zero without Chinese-made vehicles? And the government’s going to have to think really, really hard. What are we going to do? Where are we going? And they’re going to have to address that.

Sam Hawley: Dr Gail Broadbent is an adjunct fellow at the University of Technology Sydney. This episode was produced by Bridget Fitzgerald and Nell Whitehead. Audio production by Sam Dunn. Our supervising producer is David Coady. I’m Sam Hawley, ABC News Daily will be back again tomorrow. Thanks for listening.