Are Chinese cars too cheap? | Opinion

It doesn’t take a 360-degree parking system with sensors and cameras to realise the Federal Government is backing itself into a difficult corner.

The government recently set itself the target of reducing the country’s emissions by more than 60 percent by 2035, which would require (amongst other things) reaching 50 per cent electric vehicle (EV) sales. That’s an ambitious target given EVs still make up less than 10 per cent of the market and consumers have made it clear they prefer hybrids and conventional internal combustion engine vehicles. However, if that wasn’t a bold enough aspiration, it appears the government wants to rapidly accelerate EV sales while making them more expensive, not cheaper.

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“There’s going to be a meeting in Africa next March and Australia is very strongly pushing for reform of the WTO [World Trade Organisation] to make sure it’s fit for purpose to deal with the trade issues in the world,” Trade Minister Don Farrell told The Herald.

“We think the WTO needs to focus on oversupply issues… There’s plenty of products that I think people would say there’s an oversupply. There’s questions about steel, questions about electric vehicles.”

I want to make it clear at this point that I am not a political analyst, my expertise is cars. But there is no avoiding the crossover between the Chinese car industry and politics. 

China’s rapid global expansion, led by its strong EV focus, is a growing political concern around the world and has already seen heavy import sanctions against Chinese cars in both Europe and the USA (where Chinese cars are effectively banned due to restrictions on their software).

Those markets have a car manufacturing industry to protect, which is not the case in Australia, so it is a different argument. The most affordable electric vehicles in Australia are from Chinese brands - MG, BYD and GWM - with the only non-Chinese EV under $40,000 the tiny Hyundai Inster.

There is no question Chinese brands are leading the charge (pun intended) when it comes to cheaper EVs. The MG S5 EV starts from $40,490 and the Geely EX5 is priced from $40,990, which is significantly cheaper than its rivals from more-established brands. For example, the Kia EV5 starts at $56,770, the Hyundai Ioniq 5 from $69,800 and the Toyota bZ4X from $66,000, despite competing in the same segment as the MG and Geely models.

This is the core of the issue for the government — it has concerns of China’s trade practices and technology, but it is clearly providing the best options to grow EV sales and cut transport emissions by next decade.

It should be pointed out the Chinese government also has concerns about the state of its own industry. As we recently reported, the government may introduce export licences for car makers in order to stop them dumping cars into markets with little or no support. This is less of an issue for the Australian market, but it has created an intense competition in the domestic market, which ultimately puts pressure on all Chinese car makers.

So what’s the solution? On the one hand the government could try to ‘even the playing field’ as it sees it, but placing tariffs or similar restrictions on Chinese-made cars. While that will be popular with some, it won’t help the car buying public that is looking for more affordable electric vehicles. Instead, it will likely only make EVs more expensive and therefore less popular.

That would certainly be good for the big name brands that are struggling to sell EVs, but it’s ultimately not good for you, the consumer.

In the end, the politicians will decide but it’s clear to me that the current government can’t have things both ways. If it wants to motivate more Australians to buy electric cars and cut emissions it needs to be looking for a solution to make them cheaper, not more expensive.

But if the Chinese car industry is able to keep up its current rate of growth, what impact will that have on the market long-term?

There’s no obvious solution, but with politicians in Canberra having dragged their feet on vehicle emissions for over a decade, they will need to figure out what direction they want to go as soon as possible to avoid leaving all motorists in a difficult spot.