The National Association of Automobile Manufacturers of South Africa (NAAMSA) will present a position paper to government, raising five key concerns that need to be addressed in order to create a favourable environment for electric vehicles (EVs) in SA.
Mike Mabasa, CEO of NAAMSA, told ITWeb that the body’s EV advisory team – the Electric, Hybrid and Autonomous Vehicle Committee, which consists of representatives from local vehicle manufacturers – is working on a proposal aimed at drawing government’s attention to help better prepare SA for the electrification of transport.
The five key proposals to be addressed to the Department of Trade and Industry (DTI) at the end of the year are: the development of a clear policy framework providing guidelines on the local rollout of EVs and hybrid vehicles; better infrastructure provision throughout the country; establishing manufacturing plants for local production; the reduction of the 25% EV import tariff; and considerations around the type of technologies and components to be used in EVs.
“The evolution of electric vehicles in SA is an important development for the automotive industry, and we want to make sure SA is not left behind. The discussions around these five key critical issues will help us understand where we are, and what we need to do in order to work together and better prepare SA for more vehicles on our roads,” explains Mabasa.
“The industry is keen to take this conversation to government, because the evolution of EVs in SA is not about whether it is going to happen or not, it is about what speed is it going to happen.”
While the amount of required financial support has not yet been established, NAAMSA’s value proposition to government is that an increase in local EV uptake would reduce both greenhouse gas emissions and urban air pollution, as EVs have better longevity, which works out to be more cost-effective for consumers as compared to combustion engines.
“Furthermore, managed well, the shift to EVs will help create new industries and services, in turn contributing to job creation in SA,” adds Mabasa.
There are around 12 million cars registered on local roads, according to NAAMSA.
Around a thousand EVs have been sold in SA to date – indicating a 167% increase since January 2018. However, the pace is much slower than in other parts of the globe.
In March, Jaguar Land Rover became the third vehicle company to introduce an EV range in SA, with the new Jaguar I-Pace. The first EVs in SA were the Nissan Leaf, introduced in 2013, and the BMW i3, introduced in 2015.
Gauteng accounts for half of all EVs on the roads, while in the Western Cape there are 252. The country’s remaining provinces account for fewer than 100 EVs each, according to car insurance comparison site QuotesAdvisor.com.
Research firm TrendForce predicts in the Global Automotive Market Decode for 1Q report that global EV shipments will reach 5.15 million in 2019, representing year-on-year growth of 28%.
EVs and hybrid EVs will account for an estimated 30% of all vehicle sales by 2025, it adds.
Norway is currently the world’s biggest EV market where, in 2018, battery EVs accounted for 30% of market share, with plug-in hybrids at 19%.
Dynamics of local production
Local vehicle manufacturers produce around 610 000 vehicles annually in SA, with around 58% of these being exported to over 155 countries globally, notes Mabasa.
“Our export market is higher than our local market and global countries are beginning to set tight targets of up to 30% reductions in their carbon emissions. So, they are shifting their focus to having more EVs on their roads to meet these targets. While local EV production is not something that will happen tomorrow, we need to start having these conversations to understand how we can better prepare ourselves for when the time comes.”
Hiten Parmar, director of uYilo e-Mobility Programme, run by the Technology Innovation Agency, says SA has a large automotive manufacturing industry, contributing about 7% to national GDP.
The DTI’s Automotive Production and Development Programme (APDP), he adds, is direct support to drive this economic investment and activity into the country.
“However, the APDP has no direct incentive for manufacturers to assemble EVs locally over the traditional petrol/diesel vehicles, hence there are no EVs being manufactured locally as yet. The successor to the APDP, the SA Automotive Master Plan for 2035, does not directly include any incentive for local manufacturing of electric vehicles,” says Parmar.
The ideal scenario, he continues, would be to include manufacturing incentives for local production of electric vehicles.
“With this, the current manufacturing industry will maintain its employment levels and even grow to supply increased global demand for electric vehicles.”
NAAMSA says local production will also pave the way for smaller, more affordable entry-level EVs to be manufactured, which will contribute to an increased uptake in EVs.
Fair tax model
EV import tariffs are currently at 25%, much higher than the 18% import tariffs for combustion engine vehicles. NAAMSA members are working on a suitable tax model and incentive programme proposal for EVs in SA.
“As with global countries, the ideal situation would be to put incentive programmes in place, to increase rollout and generate interest. So, what we want to see is the reduction of the 25% so that we can stimulate demand. It is for this reason that we want to have a discussion with government, so that we can understand their rationale around how these prices are determined and why there is a 7% difference,” says Mabasa.
Wonga Mesatywa, executive director of corporate affairs at Nissan SA, says: “EVs still cost relatively more than normal petrol or diesel vehicles, which is one of the many obstacles to increase market adoption. By reducing the tariff cost, market pricing can become more attractive, thereby stimulating demand and thus adoption.
“However, tariff reductions alone may not be enough to stimulate demand. Other incentives and infrastructure development must be combined with enabling legislation in order to successfully fast-track establishment of the local EV market.”
Hailey Philander, BMW Group i-product communications specialist, also believes the reduction in the import tariff will significantly lower the barrier to entry of electric mobility in SA.
“Lowering the tariff will open the arena to a number of manufacturers of electric vehicles and, generally, result in a reduction in the purchase prices of electric vehicles. The BMW Group, however, believes sustainable mobility thrives wherever there is an effective combination of three factors: customer demand, legislation and innovative partnerships. We are confident the revised APDP, which comes into effect from 2020 to 2035, will facilitate closer cooperation on discussions around EV imports and future infrastructure developments.”
Jaguar Land Rover has partnered with electric vehicle chargingservice and equipment provider GridCars, to build public charging stations across SA's frequently-travelled highways.
The carmaker has invested millions in the development of public charging stations, aiming to cover all the county's major routes in Johannesburg, Pretoria, Durban, Cape Town, Port Elizabeth, East London and Bloemfontein.
There are over 90 EV charging stations in Gauteng.
BMW has 57 ChargeNow charging stations in SA, six of which are shared with Nissan. The companies have collaborated with hopes to expand the base by adding an additional 30 ChargeNow stations to the South African charging network by the end of this year.
However, independent motor vehicle expert and radio commentator Nico Smit says the current infrastructure availability is insufficient to accommodate a large number of vehicles driving throughout the country simultaneously.
“Currently, an EV can drive all the way to Cape Town; however, if we have five or more vehicles driving along the same routes at the same time, they may encounter challenges in sharing the public charging stations. Take into consideration that an 80% charge can take up to 40 minutes on average, therefore if we have five cars driving along the same route, this would create long queues along the charging stations. It is imperative that we start to plan ahead as more vehicle manufacturers divert their focus to EVs.”
As far as NAAMSA’s government proposal is concerned, Smit believes this is an optimistic move that requires well-rounded support.
“One of the reasons countries like Norway are already offering significant incentives for consumers who buy EVs is because they use natural resources for their power supply. While NAAMSA’s lobbying for a fertile EV environment will be beneficial, we have to take into consideration that we are using an electricity grid that is sometimes battling to supply us with enough power.
“Another thing we need to consider is the rollout of mainstream, more affordable EVs locally, as the concept of high-end expensive luxury EVs may not be in line with what the local market is looking for, hence the slow uptake.”