Add Category
Henry He is one of 8 million people in China who drive electric vehicles (EVs).
The Shanghai resident bought his first EV in 2015 for about $20,000, to save money.
"A major reason was that the rego was issued free of charge by the Shanghai local government when buying an EV," the 46-year-old told ABC News.
"The auction price for a rego in Shanghai is generally about 100,000 yuan ($21,145). It's more expensive than the car."
For years, Chinese EV owners have been enjoying subsidies from central, provincial and local governments, with tax exemptions, free registration and cash rebates.
It is estimated that 100 billion yuan ($14.8 billion) has been handed out to EV buyers, including commercial fleet operators, by the end of 2021.
Despite the central government's recent move to phase out all subsidies for new energy car sales, the EV market in China is still growing.
Entering a new phase
China's sales of new energy cars — which include battery-electric, plug-in hybrid and fuel-cell vehicles — are expected to double in 2022, reaching 6 million. The majority of the cars are battery electric vehicles.
By comparison, Australia is lagging behind, despite similar government subsidies being introduced here.
High prices and limited charging facilities are to blame for Australia's sluggish uptake.
Currently, all states and territories offer some form of purchase incentives to facilitate sales.
For example, consumers in Victoria and New South Wales can get a $3,000 rebate.
From January to November, 2.9 per cent of all cars sold in Australia were battery EVs, according to data from the automotive industry peak body Federal Chamber of Automotive Industries (FCAI).
China passed that percentage in 2018.
"In China — at least in provinces like Jiangsu, Zhejiang and Shanghai, generally speaking — all gas stations on highways have EV charging points," Mr He said.
"All my friends between the age of 25 and 40 have brought EVs."
Yuan Chen — a professor in chemical engineering from the University of Sydney — said the Chinese EV market had entered a new phase.
"The current Chinese EV market has shifted from subsidies-driven to market-driven," Professor Chen said.
"China's EV market has a dynamic ecosystem. They have 300 EV companies and there are more than four million charging points being installed [over] the last few years.
"Tesla Model Y, BYD Song Plus and Wuling Hongguang Mini EV are the most popular models. They win their shares through intensive market competition."
The global expansion
The country has become the world's largest EV market.
According to data from China Association of Automobile Manufacturers, in November 2022, China reached its 2025 target: to hit 20 per cent of all cars sold in the country to be EV, three years earlier than its schedule.
China's top leaders have been trying to carve out the country as a market leader in the global EV industry.
In 2014, China's president, Xi Jinping — speaking at a Shanghai car manufacturer — said the development of electric vehicles was the only way for China to transform from a big automobile country to an automobile power.
And, by production volume, China is now the world's largest EV manufacturer.
It's not just its domestic market that is thriving. Chinese automakers are launching into markets such as Europe, the Middle East, South-East Asia and Australia.
"This is a part of the overall national strategy of the Chinese [car] manufacturing … it's just a natural process to enter markets [that] are mature and stable," Professor Chen said.
He added that, over the past 20 to 30 years, the Chinese car industry had matured, with the help of overseas acquisitions, local joint ventures and access to critical raw materials such as lithium.
European car brands — such as Swedish manufacturer Volvo and British manufacturer MG — have now been acquired by Chinese companies.
"Specifically, in the EV industry, the battery is a key component," Professor Chen said.
"The Chinese battery manufacturing is dominating the world's market – more than 60 per cent of car batteries are currently produced in China."
It has been reported that more than a dozen new EV models are coming into Australia in 2023, including Chinese manufactured EVs from BYD and MG.
BYD is China's largest carmaker and a major battery manufacturer, while MG is backed by Chinese state-owned car company SAIC Motor.
That would add competition to the Tesla-dominant Australian market, with Tesla Model 3 (around $65,000) and Model Y (around $75,000) currently accounting for half of the EV purchases.
Even with rebates, EV prices remain relatively high in Australia. Only a handful of cars are currently priced under $50,000.
Can Chinese EVs drive down prices in Australia?
BYD and MG entered Australia late this year, offering cars below the $50,000 mark.
"We have committed to at least two models coming on to the Australian market every year," according to Luke Todd, the chief executive of EVDirect, which is BYD's exclusive distributor for electric passenger vehicles in Australia.
"We do anticipate prices [will] become a little bit more competitive in the coming years as there's more and more [electric] vehicles on the road."
Mr Todd said EVDirect was bringing a light SUV (BYD Dolphin) and a sedan (BYD Seal) onto the market in early 2023.
Pricing for the new models has yet to be revealed, but Mr Todd said Dolphin would be cheaper than the currently available model, BYD Atto 3, which is priced around $49,000.
Meanwhile, MG's current model ZS EV costs around $45,000, probably the lowest-priced model on the market. The company is launching a new model, MG4, in early 2023.
"We currently have a MG4 on our shores for local testing and can confirm that we are working through the Australian Design Rules process for this variant," a spokesperson from MG Motor Australia said.
Professor Chen said some of the Chinese EV models were likely to drive down prices for Australian consumers.
"The cost of manufacturing an EV in China is lower than other countries, given locally made batteries, cheaper labour costs and a comprehensive supply chain for all the car components," he explained.
"Some of the low-cost Chinese models will definitely be able to bring in to test the Australian market."
EV uptake about to accelerate in Australia
Forecasts from independent consulting firm Boston Consulting Group (BCG) suggest EV sales will increase by 30 per cent in 2023, a jump from about 100,000 this year to 150,000 next year.
It also expects that EV car sales will make up more than 35 per cent of new car sales in Australia by 2030.
There has been a steady increase in EV sales over the past year. In November, 4.7 per cent of all cars sold were EVs.
"We're almost at that tipping point that we've seen in other markets, which is around that 5 per cent mark," according to Anita Oh, managing director and partner at BCG.
She said federal and some state governments' emission reduction targets, consumer willingness and improved charging availability had laid the foundation for an acceleration in EV uptake.
"This trend is being driven by favourable conditions that have, until now, slowed the uptake of EVs compared to other markets," Ms Oh said.
"For example, we've gone from 783 public charge points in 2018 to almost 3,700 in 2022.
"By 2040, we estimate there'll be around 350,000 public charging points in Australia."
According to a survey by the Electric Vehicle Council, more than half of Australians now consider an electric vehicle will be their next car.
Newcastle resident Ian Wilcox purchased a Tesla three years ago and his son, Oliver, recently bought his own EV.
Oliver does a lot of driving for work. He decided to buy a cheaper model made by BYD.
"For savings of almost $20,000 dollars, it was definitely worth the risk and it's been great," the 22-year-old told ABC News.
Ian Wilcox said that, for a faster green transition, everyone would need to get in the driver's seat.
"It's great that all these different models are coming in," he said.
"And then there's going to be competition, innovation, different styles of cars.
"If we're really going to get to drive this change, we need young people like Oliver to get behind it."