SA paves way to establish new electric vehicle policy

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 20 May 2021

The Department of Trade, Industry and Competition (DTIC) has released a green paper on the advancement of new electric vehicles (EVs) and battery-electric vehicles (BEVs) in South Africa.

This after the DTIC has, over the past few years, been engaged in talks with local vehicle manufacturers on providing support for import and local production of electric and hybrid vehicles in SA.

The Draft Green Paper seeks to develop a framework upon which a comprehensive and long-term automotive industry transformation policy on new EVs can be developed. It will have a specific focus on the creation of a high-yielding business environment, including an appropriate fiscal and regulatory framework that makes SA a leading and highly competitive location, not only on the African continent but globally, for EV production.

Speaking during his budget vote address to Parliament on Tuesday, DTIC minister Ebrahim Patel noted the purpose of the green paper is to establish a clear policy foundation that will enable SA to coordinate a long-term strategy that will position the country at the forefront of advanced vehicle and vehicle component manufacturing.

“The strategy is complemented by a consumption leg, and a focus on increasing competitiveness in the global race to transition from the internal combustion engine era, into electro-mobility solutions and technologies,” explained Patel.

“We must step up efforts to build EVs in South Africa, to keep our auto industry at the cutting-edge of new market developments, and to maintain our export capacity for key markets such as the EU and UK. They have both set new targets and deadlines to reduce the number of fossil-fuel-reliant vehicles on their roads.”

Trade and industry minister Ebrahim Patel.
Trade and industry minister Ebrahim Patel.

While existing policies around the world suggest healthy growth of EVs, in SA, vehicle industry players have for years brought to light numerous challenges hindering the country from progressing in the EV market.

These include supportive regulatory frameworks, additional incentives to safeguard EV sales from the economic downturn high costs of EVs and insufficient public charging stations across the country, among others.

While SA is leading other African countries in EV adoption, in comparison to other emerging markets like India and Mexico, the country is falling behind, according to the Global EV Outlook 2021 compiled by the International Energy Agency.

In 2020, the number of EVs across the globe reached 10 million, with SA accounting for 1 332 vehicles.India had 12 500 EVs at the end of February 2021, while Mexico had 7 100, notes the report.

Governments across the globe have been increasingly introducing policies or strengthening existing policies to ensure an uptake in EV purchases, in efforts to reduce carbon emissions.

The UK government has stipulated that 60% of all cars and small vans need to be electric vehicles by 2032 and completely carbon-free by 2035.

Norway is the world’s biggest EV market. The country has long been hailed as a leader in the race to adopt electric cars, with BEVs at 40% of market share. This is largely attributed to the country’s many incentives and tax benefits for EV owners.

In Australia, the Victorian government has introduced a $100 million incentive package to encourage its citizens to invest in EVs.

Lengthy EV roadmap

The green paper, according to the DTIC, also seeks to provide guidance on support and investment in the expansion and development of new and existing manufacturing plants to help support the production of new EVs and components within SA and to grow the level of employment in the sector.

The roadmap to implementing the new energy vehicle policy will entail gazetting the draft policy for public comment by the end of May 2021 and submitting the policy proposals to Cabinet for consideration by October 2021.

In August 2019, the minister set the large automakers in SA a challenge to help develop a roadmap for the local production of electric vehicles.

The various work streams of the auto industry’s master plan were launched shortly thereafter, which included one focused on technology changes and deeper localisation.

In the same year, Mike Mabasa, CEO of the National Association of Automobile Manufacturers (NAAMSA),toldITWeb the body’s EV advisory team – the Electric, Hybrid and Autonomous Vehicle Committee, which consists of representatives from local vehicle manufacturers – was working on a proposal aimed at guiding the DTI to help better prepare SA for the electrification of transport.

NAAMSA later presented the position paper to government, raising five key concerns that needed to be addressed in order to create a favourable environment for EVs in SA:

  • Establishing manufacturing plants for local production.
  • The development of a clear policy framework providing guidelines on the local rollout of EVs and hybrid vehicles.
  • Better infrastructure provision throughout the country.
  • The reduction of the 25% EV import tariff.
  • Considerations around the type of technologies and components to be used in EVs.

“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,” noted Mabasa at the time.

According to Patel, 2020 saw a number of developments in key export markets helping to step up the pace of the EV industry through government’s efforts to green the economy and position SA as a centre for advanced green manufacturing.

“For example, in November, the first units of the new Toyota Corolla hybrid vehicle are planned to roll off the production line in South Africa. This is the beginning of a crucial public discourse that will define electro-mobility in South Africa.”

He highlighted the importance of expanding the existing 250 charging points for EVs in SA, using the agreed South African Bureau of Standards.

The green paper can be found on the DTIC’s Web site.