China's electric vehicles attack Australia: why does a country that does not welcome electric vehicles become a "fragrant food"?

Economic Observer Network reporter Zhou Ju Beijing reported that BYD's recent announcement of the sea action has attracted the attention of the industry, that is, its pure electric vehicle yuan PLUS is listed in China at the same time, and at the same time in Australia to open pre-sale. As BYD's first "strategic sea" global passenger car, Yuan PLUS will choose Australia as the first stop to go to sea, which makes many people feel confused.

For electric vehicles, Australia has always been a "post-mom" attitude. Not only will the local government not introduce exclusive subsidies for electric vehicles to stimulate the development of the electric vehicle industry, as many countries have done, but on the contrary, they have also introduced various policies to suppress them, such as taxing electric vehicles. This is extremely rare on a global scale.

In July last year, the Victorian government in Australia charged an additional 2.5 australian cent road use fee per kilometer for electric vehicles and other zero-carbon vehicles, which means that if an electric vehicle consumer travels 20,000 kilometers a year, it will cost 500 Australian dollars (about 2,200 yuan) more than fuel vehicles. The Victorian government's rationale for this tax is to ensure that EV owners contribute to the maintenance of roads.

Based on the Australian government's indifference to electric vehicles, the local electric vehicle market is very small. According to the data, only 6900 electric vehicles were sold in Australia in 2020, accounting for 0.7% of the total local new car sales. In contrast, the proportion of the United Kingdom and the European Union has reached about 10%. Some media reported that selling tractors in Australia is more profitable than selling electric vehicles, because tractors sell 2 times more than electric vehicles.

Therefore, many international car companies will choose to skip Australia when releasing new energy products. Why, in this case, why does BYD have to go forward and sell electric vehicles to this country that is very unfriendly to electric vehicles? BYD did not explain this at the metaPLUS press conference.

"BYD attaches great importance to the overseas new energy passenger car market, and new energy passenger cars have also received support from overseas countries and regions, including Australia. At present, Tang EV has gone to sea in Norway, yuan Plus has gone to sea in Australia, and plans to go to sea more models in the future according to the needs of overseas markets. On February 25, BYD replied to an interview with a reporter from the Economic Observer Network.

In fact, in addition to BYD, the new car manufacturer Weilai also seems to have sniffed business opportunities in Australia. Last December, NIO said its products would be exported to 25 countries and regions in 2025, and Australia was lit up as one of the destinations on the map it showed. It seems that after Norway became the first choice for Chinese car companies to export electric vehicles last year, Australia may become the next export destination for Chinese car companies.

The business opportunity behind "apathy"

Behind Australia's indifferent attitude towards electric vehicles is its dependence on and protection of traditional energy development. According to the data, Australia has the second highest carbon emissions per unit of GDP among OECD countries (made up of 38 member countries), while Australia has the highest per capita carbon emissions of all OECD countries.

This is because Of Australia is highly dependent on traditional energy sources, which are mainly derived from fossil fuels and coal to generate electricity. And in Australia, the traditional energy industry is related to hundreds of thousands of people employed. Australian experts have warned that setting a more difficult carbon emissions target than before could hit the country's $2 trillion (9.5 trillion yuan) economy. It is not difficult to understand why Australia has always been very resistant to environmental protection issues and extremely rejected electric vehicles.

Australia's local auto industry is very sluggish, mainly imported. Australia had four major automakers: Toyota, Mitsubishi, GM Horton and Ford, but they all closed their factories in Australia.

However, the government's apathy does not mean that australians do not have demand for electric vehicles. In fact, according to an annual survey commissioned by the Electric Vehicle Commission, around 50 per cent of Australian car owners have considered buying an electric vehicle as their next means of transportation since 2018. But this interest has not translated into actual consumption, because in the case of car companies reluctant to enter and postpone the launch of electric products in Australia, Australians are in a situation where there are no cars to buy.

According to data, as of the end of 2020, the new energy vehicle models in the Australian market are only about 50. According to previous consumption data, Tesla occupies an absolute market share of the Australian electric vehicle market, reaching more than 80%.

But with Australia finally announcing a final decision last year on its plan to "achieve zero carbon emissions by 2050," things could take a turn for the better.

In October 2021, the Australian government said it would achieve a goal of net zero carbon emissions by 2050 to ease international criticism, but the government added that it would not legislate the target, relying instead on consumers and businesses to drive emissions reductions. That is to say, for the electric vehicle industry, the government may not introduce relevant preferential policies and purchase subsidies in the future, which is obviously still lacking in sincerity.

But Chinese car companies still see business opportunities behind them. On the one hand, although there may be no subsidies, Australia has proposed a relatively clear target for the scale of electric vehicle development under the carbon neutrality target, that is, 1.7 million electric vehicles on the road by 2030. With Australia saying to accelerate the construction of charging stations and the hydrogen refueling war, from 10,000 to 1.7 million, the market space for electric vehicles in Australia is huge.

On the other hand, there are not many electric vehicle products in the Australian market at present, and Tesla is mainly based on higher prices, which just gives Chinese car companies the opportunity to enter the blank market.

According to foreign media reports, before BYD entered, the cheapest zero-carbon electric vehicle in the Australian car market was the Chinese MG brand ZS car series, priced at 43,990 Australian dollars (199,900 yuan), while bydie's cheapest electric vehicle sold in Australia in the future may be less than 35,000 Australian dollars (159,000 yuan), obviously trying to seize a more cost-effective market range to meet more Australian purchase demand. Weilai Automobile is more like going directly to Tesla, hoping to get a piece of the high-end market.

BYD officials said that Atto3 (BYD dollar PLUS name in Australia) has received 15,000 letters of intent so far. SAIC's MG performance in Australia has also added confidence to Chinese brands, and MG will sell 1388 vehicles in Australia in 2021, becoming the best-selling electric vehicle brand second only to Tesla. In 2021, Australia ranked ninth among the top ten countries in Terms of China's export volume of new energy vehicles, and the ranking also rose a lot.

"The rapid growth of China's exports of new energy vehicles has provided a second growth curve for car companies. In addition to actively expanding the pioneer market of new energy vehicles (such as Norway), Chinese new energy vehicle companies are also actively entering markets with good acceptance of Chinese brand fuel vehicles, such as Australia. Mei Songlin, a senior analyst in the automotive industry, told the Economic Observer Network reporter. The data shows that China has become Australia's fourth largest producer of new cars, after Japan, Thailand and South Korea.

Drunkard does not mean to drink?

But within a few years, the size of the Australian market is not expected to be too large. Since Australia has not introduced relevant subsidies and preferential measures to support the development of electric vehicles, its zero-carbon target has been ridiculed as a self-deceptive joke. For electric vehicles, the Australian government believes that when the car itself becomes cost-competitive, it will naturally be accepted by the Chinese people.

Under such circumstances, is there any other reason behind China's electric vehicle collective attack on the Australian market? This is thought to be possible in relation to Australia's rich mineral resources, especially in the current shortage of raw materials for power batteries. "It is not excluded that Chinese new energy vehicle companies will also take this opportunity to actively explore cooperation with Australian upstream enterprises." Mei Songlin told the Economic Observer Network reporter.

According to the data, Australia's most attractive car companies are its abundant natural resource reserves that can be used for electric vehicle batteries. It is reported that Australia has many lithium and nickel resources, which are the main raw materials for the production of ternary lithium car batteries. According to the data, Australia's exports of spodumene are expected to reach 1 billion Australian dollars in 2021, and nickel exports are expected to reach 4 billion Australian dollars.

At the same time, as almost all global car companies have said that they are transitioning to electrification, the demand for lithium and other minerals in the automotive industry continues to soar, and the competition for these key mineral resources is becoming more and more fierce. In the case of the continuous shortage of battery materials, many car companies have begun to compete for "buying mines" in the international scope, hoping to stabilize the supply chain from the source.

BYD is one of them. On January 12 this year, BYD won the bid for 80,000 tons (80,000 tons of lithium per year in a 20-year period) in a 400,000-ton lithium tender launched by the Chilean mining sector, with a bid of about $61 million. But on Jan. 14, a Chilean district court said it suspended the lithium mining contract between Chile and BYD over environmental protection and economic development issues. This means that BYD needs to tap more possible mineral procurement channels. The Economic Observer Network reporter asked BYD whether it planned to cooperate with Australia in mineral resources, and its reply said that "there is no news to be revealed."

As the best-selling car brand in Australia, Tesla has made it clear that it is most interested in Australia's rich mineral resources, and has been locking in the supply of lithium, nickel and other battery raw materials in Australia.

Tesla Chairman Robin Dholm said last year that Tesla has 3/4 of its lithium raw materials and more than 1/3 of its nickel from Australia, and that each Tesla electric car contains mineral raw materials worth about $5,000, and That Australia has the ability to fully meet Tesla's needs for these materials.

When Bydir and other mainstream Chinese electric vehicle companies enter the Australian market, there may be more opportunities to negotiate mineral resource cooperation with Australia to ensure its subsequent stable development. BYD is a relatively special domestic automobile company, which has previously created a vertical supply system, and it is also a battery manufacturer, so it is more necessary to maintain a stable supply of battery raw materials. In China, battery suppliers such as Cataline Times continue to seize the world's lithium, nickel and other mineral resources.

The data shows that since the end of 2020, the raw materials for power batteries have been rising. Taking lithium carbonate as an example, the price of the material at that time was only about 40,000 yuan per ton, and now it has risen to 300,000 yuan / ton. It is expected that the price of raw materials such as lithium carbonate and nickel will further rise. In this context, the seemingly risky move to Australia is also a useful attempt, especially if Chinese brands are vigorously promoting export strategies.

However, some insiders believe that the entry of Chinese car brands into Australia has little to do with the pursuit of mineral cooperation. "On the one hand, at present, the export of Chinese brand vehicles to Australia has not brought investment and industry to Australia, but only occupied the other party's market; on the other hand, the Australian electric market is already small, and (Chinese car companies entering) is not expected to receive special attention from the Australian government." So this could be a simple business practice. Wang Wei, deputy general manager of CCID Consulting Automobile Industry Research Center, told the Economic Observation Network reporter. Wang Wei also pointed out that there are almost no local car companies in Australia, the restrictions on imported cars are relatively low, and the local consumption level is relatively high, which will be a market that can be explored overseas for Chinese car companies.