Why Chinese car brands could soon be flooding our roads: Cars like the BYD Seal, GWM Cannon and Haval Jolion are just the start after US government imposes heavy tariffs | Analysis

The US government this week has taken aim at Chinese electric car makers and it could have giant consequences for Australia.

The Biden administration has slapped Chinese EVs with a 100 per cent tariff, up from the current 25 per cent, snatching away their competitive edge with the stroke of a pen.

"American workers can out-work and out-compete anyone as long as the competition is fair, but for too long it hasn't been fair," said President Biden according to Reuters. "We're not going to let China flood our market."

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He said Chinese government subsidies ensure the country’s carmakers don’t have to turn a profit, giving them an unfair advantage in global trade.

It’s not just EVs in the firing line but also batteries and semiconductors, two critical components of electric cars, have had 25 and 50 per cent tariffs imposed respectively.

Chinese electric cars are now effectively shut out of the United States just at the time many brands are about to go on an aggressive global expansion.

Europe could follow in the US footsteps if its investigation into Chinese state-owned automakers finds that the government's investment into carmakers is causing artificially low prices.

GAC will bring its Aion V electric SUV.

China has aggressive manufacturing targets and it needs to keep its factories running and that pent up supply needs to go somewhere else… like Australia.

This year alone, six Chinese car brands have committed to launching here soon including GAC, JAC, Leapmotor, Skywell, Xpeng and Zeekr. 

Car making giant Geely, which owns Polestar and Volvo, has also been looking for senior executives in Sydney, which would foreshadow another imminent arrival.

This gaggle of brands will join BYD, Chery, GWM, LDV and MG in Australia.

Those five already here have established a firm foothold, with MG a top 10 seller and GWM knocking on the door.

China has leapfrogged Korea and is now the third biggest exporter of cars to Australia behind Japan and Thailand, the latter is where most dual-cab utes are built.

Australia’s New Vehicle Emissions Standards (NVES), which passed through parliament this week, makes us an even tastier target for Chinese EV makers.

The BYD Shark plug-in hybrid ute will arrive later this year.

The new standards fine car brands for every vehicle they sell over a certain level of emissions, but this can be offset by selling electric or low-emissions vehicles.

This will roughly translate to more expensive petrol and diesel cars, which will make cut-price Chinese electric cars more appetising to consumers.

Many Chinese car brands are armed with a war chest of cash and resources to take on the world’s established players.

The boss of Xpeng’s Australian importer Jason Clarke told CarsGuide the Chinese maker is set up for success.

“Their market cap is US$10 billion. I read they have six billion in cash ready to deploy, they’ve got their own tech stack, they’ve got 3000 people in R&D and 800 in AI. They want to be a major player globally in EVs and I think they’re set-up to do it,” he said.

The Chinese companies also have the manufacturing capacity to blow the competition out of the water.

Zeekr is owned by Geely, which also owns Polestar and Volvo.

Kia and Hyundai have both struggled to get as many EVs as they need, Volkswagen has yet to bring an electric car to market and Toyota’s first electric vehicle has so-far failed to excite.

Tesla has enough supply to meet demand because its Australian bound vehicles are built in China.

Volvo is owned by Chinese company Geely and the local arm’s boss Stephen Connor told CarsGuide recently it saves five per cent on tariffs importing from China compared to Europe thanks to a free trade agreement.

“Plus, thanks to Chinese production (for models like the recently released EX30) we’re three weeks away from build to showroom whereas Europe is six to nine weeks. 

“We can get an increase in volume within three to four weeks,” he said.

This makes Chinese brands more nimble and cheaper to get on Australian roads than any other EVs on sale.