Electric vehicle sales in Australia are surging, fueled in part by favorable policies and gas prices, as Chinese manufacturers like BYD use inexpensive models to push into what was once a stronghold for Japanese automakers.
“We’ve seen a dramatic growth,” said Tony Weber, CEO of Australia’s Federal Chamber of Automotive Industries (FCAI). “The big factor in that has been the crisis in the Middle East and its impact on diesel and petrol prices.”
“There’s also an element of structural change within the market, and people now see pure EVs as an alternative” to gasoline cars, Weber said.
Roughly 1.2 million new vehicles are sold each year in Australia. Last year, Japan’s Toyota Motor had a 20% share of the market, selling roughly 240,000 vehicles. Toyota has held on to its top rank in the country for 23 years.
As of July, EVs made up 21.7% of new cars sold in the country, according to FCAI, basically tripling their share compared with January. Around 110 EV models are now available in Australia.
Chinese automakers have taken the lead, with BYD selling roughly 19,000 vehicles in June, narrowing its gap with Toyota to 243 vehicles for the month. Until October 2022, BYD had sold no vehicles in the country.
High fuel prices are the biggest factor behind the rapid growth in Chinese EVs. Australia’s average gasoline price in March had risen about 30% from AUD 1.68 (USD 1.2) per liter in February before the US-Iran war. Many consumers have opted to switch over to EVs for their comparatively low running costs.
EVs from Chinese makers also tend to be relatively affordable.
“One of the main things that BYD is doing in Australia [is] bringing in models that are … more affordable than similar Toyota products,” said Riz Akhtar, CEO of Australian automotive research firm Carloop. He gave the example of options for hybrids and plug-in hybrids, saying that when consumers compare Toyota’s RAV4, starting at around AUD 46,000 (USD 32,698.3), to BYD’s Sealion 6, starting at roughly AUD 43,000 (USD 30,565.8), they will buy the cheaper option.
Despite the country’s geopolitical wariness of China, “consumer behavior … in the Australian vehicle market, is driven by one thing, and that is price,” said FCAI’s Weber.
There are now at least 15 brands from Chinese automakers active in the market, with more on the way, according to Australian automotive media.
China’s brands have been rapidly introducing new models, deliveries are quick, and dealer networks are growing.
“BYD and Denza collectively will launch around six products, brand new,” said Akhtar, referring to BYD’s luxury brand. “So this is the speed at which BYD is moving. … Toyota isn’t launching new models at the same pace.”
Drawing comparisons in delivery times, Akhtar said of BYD buyers that “none of them waited more than four weeks” in contrast with a Toyota RAV4 buyer who faced a six-month wait.
“Customers don’t want to wait,” Akhtar said. “Consumers will walk to a brand that can provide them a car in a couple of weeks, if not immediately.”
Chinese companies are digging into Japanese rivals’ share of the pickup truck market as well. BYD began taking orders for its Shark 6 plug-in hybrid pickup in 2024, and has garnered 16% of that market in just under two years. The Shark 6 can run 80 kilometers on battery alone and is cheaper than similar products.
In 2017, Toyota ended production in Australia after over half a century. US automaker Ford also stopped building vehicles there in 2016. Local brand Holden ended production in the country in 2017, and the brand was retired in 2020.
Unlike the US and Europe, Australia does not impose high tariffs on China’s EVs, which has contributed to their rapid rise.
Australia’s government is actively promoting EVs as a key part of decarbonization. The country’s ambitious targets include cutting greenhouse gas emissions to 43% below 2005 levels by 2030, and generating 82% of electricity through renewables in the same time frame.
One pillar of the country’s EV policies is the “New Vehicle Efficiency Standard” introduced last year. The regulation sets average emissions maximums for new vehicles for each automaker, encouraging more electric and fuel-efficient vehicles. This puts pressure on companies with a high proportion of higher-emission vehicles such as pickup trucks.
Companies earn credits for meeting the standard, but incur debits if they do not, and then must eventually pay penalties or purchase credits from other companies to cover their balance.
“The Chinese brand can basically use the credit that they receive for selling an electric vehicle to offset the price,” said Steven Bragg at accounting firm Pitcher Partners.
Canberra’s motivation for promoting EV adoption goes beyond the environment. Australia is a major producer of lithium, used in batteries, so more EV sales would give that domestic industry a boost. The country sends 90% of its lithium concentrate exports to China.
As Chinese EV makers rapidly gain a presence in Australia, they face the challenge of establishing customer trust.
“The best asset that these traditional brands like Toyota have is they have spent decades building trust with customers,” said Mike Costello, an analyst at Cox Automotive Australia & New Zealand. “You will see the more traditional brands like Toyota … focusing on the fact that while its vehicles may not be as cheap, at least you know with 100% certainty that they’ve got lots of dealers, lots of parts, good resale value, a good customer experience.”
“The challenge is really going to be for the Chinese brands to make sure that they’re delivering a similar level of service to their customers,” Costello said.
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.
Note: AUD figures are converted to USD at rates of AUD 1.41 = USD 1 based on estimates as of August 18, 2026, unless otherwise stated. USD conversions are presented for ease of reference and may not fully match prevailing exchange rates.