Chinese car giant slams electric car black hole

James Fernyhough

Nov 16, 2019

AFR

China’s biggest carmaker, SAIC, has criticised Australia’s “unique” lack of policy incentives for the electric car industry, saying the policy black hole is preventing a healthy market for environmentally friendly vehicles from developing.

SAIC, which owns the formerly British-owned car brand MG, plans to launch an MG brand electric car in Australia in 2020.

SAIC’s Pure Electric SUV concept car debuted at the 2018 Beijing Auto Show. 

But Matt Lei, deputy managing director of the company’s international business department, said the lack of incentives for consumers to buy electric cars means the market is guaranteed to be small.

“The Australian market is quite unique,” he said. “Basically, there is no policy to incentivise electric vehicles or new energy vehicles.

“In Europe they have very strict emission regulation. They are gradually lifting the bars to further prevent emissions. That’s why we’ve seen a significant reduction of diesel vehicles in Europe. While for Australia it’s a very, very unique situation. There is no policy.”

Mr Lei, who is based at the $133 billion-a-year company’s Shanghai headquarters, said SAIC still believed there would be a portion of Australian customers who would spend the extra money out of environmental concerns. But the market would be “small”. “Like I said, electric vehicles are more expensive than the traditional ones,” he said.

In China, electric cars were on average around double the price of equivalent traditional cars, he said. SAIC’s electric SUV will sell in Australia for $46,000.

Despite SAIC’s pro-electric rhetoric, the vast majority of its cars use traditional internal combustion engines. Of the more-than 7 million vehicles it sold in 2018, just 140,000 of them were electric.

Mr Lei said the Shanghai authorities had encouraged the take-up of electric vehicles by waiving the prohibitively expensive registration tax on traditional cars, which costs per vehicle $10,000. But he said even this wasn’t enough to get large numbers of consumers to buy electric cars.

“In emerging markets, a lot of people are very price sensitive. So you say, ‘I’ll give you this feature, that feature,’ and they say, ‘No, I don’t want these features, I want something I can drive in the rain that’s better than my motorbike. That is good enough.’

“So there are people going after electric vehicles, and there are also people who prefer traditional vehicles. For us, we need to be prepared for all these customers.”

He said growth in the Chinese market was slowing, as public transport improves and as the fashion for buying flashy new cars as a way of demonstrating wealth diminishes. As a result, he said SAIC was targeting six new markets: Thailand, Indonesia, the UK, Chile, New Zealand and Australia.

In Australia, SAIC is still a small player, selling just 7000 vehicles in 2018, all under the MG brand. It expects it will more than double that this year to 14,500. In China, it has deals with Volkswagen and General Motors to build some of their brands along side its own.

Carbon dioxide emissions from transport accounted for 18.8 per cent of Australia’s total greenhouse gas emissions in the year to March 31, 2018, according to the Department of the Environment and Energy. That made transport the third-biggest emitter after electricity generation and stationary energy.

Emissions from the transport sector increased 1.3 per cent year on year to 101.2 million tonnes of carbon dioxide, or the equivalent quantity of other greenhouse gases. The increase was driven by a surge in the use of diesel vehicles.

Labor, under Bill Shorten, went to the 2019 federal election with a promise to ensure that 50 per cent of new cars sold in 2030 would be electric vehicles. The ultimately victorious Coalition attacked this policy vociferously, saying Labor was telling Australians what cars to drive.

Mr Lei said SAIC kept a close watch on developments in Canberra but offered no view on whether a shift towards electric vehicles was inevitable in Australia.