Electric cars on offer in South Africa (Video)
Until recently, the number of electric cars on offer in South Africa was negligible. In 2021, South Africans bought only 896 electrified vehicles, and only 218 were fully electric. Even this low number represented an increase from the previous year, as 2020 saw sales of just 324 vehicles.
The market for new energy vehicles (NEVs) is slowly growing. This category includes fully electric vehicles, plug-in hybrids and traditional hybrids. However, at present, it is a tiny fraction of the overall car buying market. Fully electric vehicles, or EVs, account for less than 0.05 per cent of the country’s total vehicle sales. Tesla, whose CEO famously hails from Pretoria, has no plans to sell any electric car on the South African market. But, why is this the case? And, why is the overall number of electric cars in South Africa so small?
The challenge of charging infrastructure
The range of electric cars on the South African market is slowly growing. Six Audi e-tron models were introduced in early 2022. The list of big-name manufacturers planning to extend their offering includes BMW, Mercedes-Benz, Toyota and Volkswagen.
In January 2022, Tesla Motors opened its first South African office. But, this does not mean that the company has any plans to sell – let alone manufacture – any vehicles in the country. Tesla’s South African operation is about building a market for its Powerwall battery system. The company focuses on the infrastructure to support electric vehicles in South Africa, rather than selling the vehicles themselves.
In late 2021, partner company Rubicon imported a Tesla Model X as a publicity stunt to raise awareness of the need for more EV charging stations. Clearly, this issue is reducing manufacturer confidence across the South African market.
There are over 170 charging stations for electric cars in South Africa. Connections are good in major cities and the routes between them, like the N3 from Durban to Johannesburg. But, while the highly urbanised, densely populated Gauteng Province has over 40 per cent of the country’s EV charging stations, other areas are not so well served. To fuel a nationwide shift to electric cars, we need a network of charging points that covers more remote and rural areas.
Opportunities wasted for electric cars in South Africa
As far back as 2008, South Africa had four EV prototypes that it demonstrated to the world. The Joule, launched by Cape Town’s Optimal Energy, was an all-electric car. It even won ‘Best on Display’ at the Geneva motor show in 2010 and received rave reviews.
So, how did a country that pioneered electric cars end up in a situation where it has very few for sale and none manufactured locally? Perhaps there are lessons to be learned from the fate of the Joule. The government shut down the project in 2012. In 2015, the former Chief Technical Office of Optimal Energy wrote a paper about what went wrong. Gerhard Swart believes that it was a mistake to get the government so heavily involved, for several reasons. First, it created a conflict of interest with the government’s perceived obligation to protect the traditional motor industry and other political considerations.
According to Swart, the government and other investors lost faith that the plan was executable, so they decided to discontinue funding. He believes that better communication between stakeholders and a clearer vision of the future could have saved the Joule project.
“Now, ten years later, it seems obvious that EVs are part of the future”, wrote Swart. “Taking on the automotive industry, however, seemed very ambitious and mainstream automakers seemed to have rejected the idea of electric mobility.” Even now, is South Africa still failing to understand the importance of electric vehicles?
A strong industry under threat
South Africa has a thriving car manufacturing industry. Despite being hit by COVID-19 in 2020, exports of cars and car parts rebounded to hit a record R207.5 billion in 2021. Cars and car parts make up around 12.5 per cent of the country’s total exports, so it is very important to the balance of trade. However, this thriving industry does not include electric vehicle manufacturing. Despite the welcome news that the Audi e-tron will be sold in South Africa, it looks likely that it will continue to be manufactured in Belgium.
Mercedes-Benz is another example. The German car manufacturer plans to launch at least five of its EQ models in South Africa. This is a company that has a long history in South Africa. Benz Velo imported the first ‘horseless carriage’ to the country in 1896, and Daimler-Benz opened its first branch in South Africa in 1954. However, its new electric models will probably continue to be built in Germany.
South Africa exports cars to 152 countries worldwide. But, its biggest vehicle market is the European Union. Namely, 73 per cent of vehicles that South Africa exports go to Europe. On the other hand, Asia buys just 11 per cent, and the rest of Africa takes around six per cent. Therefore, the European market is extremely important.
However, the EU is currently on a path to phase out petrol and diesel engines as part of its green transition. This could cause a massive shift in the type of vehicles it imports. One trade body even commented that traditional internal combustion engine cars could be “killed off” by 2026. If South Africa’s manufacturing continues to focus on traditional vehicles, it could fall behind.
The barrier of import tariffs
Import tariffs are one barrier to the rollout of electric vehicles in South Africa. Electric cars imported to South Africa face tariffs of 25 per cent, compared to just 18 per cent for vehicles with traditional internal combustion engines.
Until the introduction of the hybrid Toyota Cross in October 2021, South Africa imported all NEVs for sale in the country. With the lack of local manufacturing capacity, most NEVs in South Africa face this import tax. This pushes up the price and makes electric cars in South Africa a less affordable choice.
This extra tax for EVs is actually a hangover from the days when golf carts were the only electric vehicles South Africa imported. Reducing it to parity with the 18 per cent duty on petrol and diesel cars would mean getting rid of an outdated tax that is no longer fit for purpose.
Supporting electric cars in South Africa
To boost the uptake of electric vehicles in South Africa, we need measures to make going electric a more attractive option for motorists. This involves removing barriers, like unequal taxes and investing in the infrastructure that makes people confident to choose electric.
Another issue is the ongoing problem with load shedding. This may not be such an issue for people charging vehicles overnight at home but could be a serious problem for people who regularly make long journeys and need to power up en route.
The government has made some attempts to improve the situation. In May 2021, it published a draft Green Paper on the advancement of electric vehicles in South Africa. This is the first attempt to develop a policy foundation to help South Africa transition to electric vehicle production. Key elements include investment, regulatory support, a transition towards greener fuels and upskilling of the workforce. However, at the time of writing there has been no progress on the steps the draft paper proposes.
An urgent need for change
South Africa has an official target to reduce its emissions to net zero by 2050. The transport sector is the second biggest contributor to these emissions, and road transport is a key contributor. It will be very difficult to achieve the target while most cars on the roads are petrol or diesel. Making more electric cars available for sale in South Africa could make a big contribution to emissions reduction. Crucially, the electricity powering them needs to come from greener sources.
There is a strong need for change. The global shift to electric cars threatens South Africa’s automotive manufacturing industry. However, the country could pivot away from polluting petrol and diesel engines to turn this threat into an opportunity. But, the lack of policy support means the country is missing out on these opportunities. There are many potential ways to support the EV transition in South Africa. These include measures, like tax incentives and investment in infrastructure.
South Africa is facing a choice: whether to get ahead of the EV transition or be left behind. If it chooses to move forwards, it has the potential to become a global leader.