EV Price War Breaks Out In Australia: A Sign Of Chinese EV Superiority

Chinese EVs are hampered by Tariffs in much of the EU, UK, and US, but they are not in Australia. This is resulting in a huge price war there that may eventually force domestic, US, and European EV sellers out of their market.

China’s significant and increasing EV cost and price advantages continue to point to that company eventually being dominant in this segment. Given the increasing cost disparities, this trend is concerning because it makes it look like China will own the worldwide EV market in a few years.

EV Prices Continue To Fall

Overall, as car manufacturers develop more EV capabilities and EV parts get cheaper (especially batteries), there has been an impressive rapid reduction in EV pricing. EVs used to be premium priced against their gas equivalents, but that is often no longer true. Particularly with cars out of China, EV prices are starting not only to drop below gas prices but well below Tesla's pricing, putting that company, along with most other car companies struggling to address the EV market, at risk.

While there is concern that China may be dumping its cars into markets like Australia, China has been aggressively cornering markets on EV parts, creating some doubt that this is illegal dumping rather than a manufacturing advantage that China has invested heavily in.

The problem for governments is that consumers love these aggressively low prices, but the companies competing with these inexpensive EVs aren’t as pleased, and there are many car dealerships owned by politicians.

With Chinese Electric car pricing dropping between 7% and a whopping 26.4%, this is a significant boon for EV sales but a massive problem for non-Chinese car companies.

Are Tariffs The Answer?

Initially, Tariffs may be a way to delay the impact of these cost and price advantages on domestic car sellers. Still, they come at a considerable cost to consumers, and in a market suffering through high interest rates and continued inflation, raising consumer costs isn’t going to be popular with voters long term.

Instead, governments looking to protect their car industries should fund the development of alternative EV technologies that lower EV costs and circumvent China’s near monopoly in Rare Earth Metals and other EV raw materials. 

The right response, particularly if this isn’t dumping, is to provide funding and help allow domestic car companies to aggressively lower their costs and pricing as well. In China, one of the advantages is that the government works very closely with Chinese companies to assure their market success, providing funding as well as other incentives that give these Chinese auto companies a significant government-sourced advantage.

So, Tariffs can work short-term, but long-term governments must step in and help restore domestic EV manufacturing competitiveness. Otherwise, it is likely consumers will increasingly move to Chinese EVs, eventually putting domestic EV vendors out of business.

Wrapping Up:

Low-cost EVs from China are dominating the Australian market, and if it weren’t for Tariffs and sanctions, they’d likely be dominating much of the rest of the world as well. While tariffs are a short-term fix for this, long-term car companies must up their EV game with the help of their governments so they can better compete with these Chinese companies, who already get unique and substantial help from their governments.

In a way, Australia is the canary in the EV coal mine in that it mostly allows every car company to set its own price. This also showcases the significant financial advantage China has in the EV market. And if this advantage isn’t mitigated or eliminated, it is likely that by 2035, when we reach critical mass for EV sales, China will own this market worldwide.

Rob Enderle is a technology analyst at Torque News who covers automotive technology and battery development. You can learn more about Rob on Wikipedia and follow his articles on Forbes, X, and LinkedIn.