Ahead of massive fuel price hikes hitting hard the pockets of motorists coming into effect this week, energy efficient, greener electric vehicles are no closer to speeding onto South Africa’s roads.
Government is caught between maintaining necessary laws to ensure a cleaner environment while at the same time putting the brakes on gas guzzling vehicles that are harmful because of the amount of carbon dioxide they emit. The country currently receives R125 billion a year from taxation on fuel, giving government a headache on its efforts to go green with electric vehicles.
The increased environmental regulations, linked to climate change mitigation and better air quality, have kick-started the transition to cleaner transportation, according to a report for the Department of Trade, Industry and Competition, the National Association of Automobile Association of Automobile Manufacturers of South Africa (NAAMSA).
But while global governments are pushing ahead with policies to support initiatives and tight environmental targets underpinned by the cheaper to own electric vehicles than petroleum-based cars over their lifetime, South Africa currently lags behind, said the report.
The country blows hot air with a solid paper trail but there’s currently no policies to go green in the short-term. Longer term plans are taking shape – slowly. But it is no comfort for motorists. With fuel prices set to rise sharply on Wednesday, many are talking about the need for a speedier transition to electric vehicles.
Statistics from the Central Energy Fund suggest that petrol is expected to rise by 87c per litre meaning that, one could pay as much as R18.26 per litre of 95 Octane in Gauteng and inland provinces and R17.54 in coastal areas in the Western Cape and KwaZulu Natal. Unleaded Octane 93 may spike to R17.55 a litre on the coast and R18.07 inland. Diesel is expected to rise by 58c. It is forecast to cost R15.66 in Gauteng and inland areas, while on the coast one may pay R15.05 a litre.
But motorists hoping for relief from going electric in terms of car ownership would find that the signs are not encouraging. The 154 page report on Harnessing Electric Vehicles for Industrial Development in South Africa by Gaylor Montmasson-Clair, Anthony Dane and Lesego Moshikaro, found that the sales of electric vehicles in South Africa have remained low. Between 2010 and 2019, only 6 043 units were sold. This is less than 0.1% of new car sales.
Over the past five years, sales of electric vehicles in South Africa totalled 472 units. Plug-in hybrid vehicles sold numbered 529 units, and traditional hybrids amounted to 784 units. In the same period 1,4 million petrol vehicles and 282 712 diesel cars were sold. On Thursday, Audi South Africa unveiled its new petrol injected Audi A3 during a virtual launch. There are no plans for an electric model but next year they intend bringing to South Africa its sports utility vehicle the Audi e-tron which has sold more than 7 000 units in Europe. Every fourth electric vehicle sold in Europe has been from the Volkswagen Group: a Volkswagen, Audi, Porsche, Seat or Skoda.
Unfortunately, South Africa is not as ready. But the comprehensive report argues that electric vehicles offer South Africa a window to position the economy and society appropriately. In the long term, rolling out electric vehicles will bring multiple co-benefits, from lower transport costs, to reduced dependency on imported fossil fuels, to improved air quality.
“It is also the only avenue to maintain the long-term sustainability of the local manufacturing industry. In the process, some dynamics will have to be managed to minimise disruptions, particularly in the electricity and liquid fuel value chains,” the report said.
Missing the curve would have dramatic consequences on the country, as electric vehicles represent the only platform to a modern, sustainable transport system in the country and globally, the report warned.
Norman Lamprecht, Executive for Trade, Exports and Research at NAAMSA The Automotive Business Council, said another study by itself and the dtic, expects to inform the policy options and support for electric vehicle sales and production. It expects to be finalised by December 2021.
“The price differential of electric vehicles compared to internal combustion engine vehicles and limited choices available in the South African market would represent the main challenges at present. New technologies are normally expensive at first until mass adoption of the technology occurs. Once greater choice and cheaper models are available electric vehicle sales will increase,” he said.
Lamprecht said, since there was already a carbon tax on ICE vehicles with regular increases, a preferred avenue to stimulate electric vehicle sales would be to reduce taxes on electric vehicles than to increase taxes on fuel injected vehicles.
Gaylor Montmasson-Clair, Senior Economist: Sustainable Growth at the Trade & Industrial Policy Strategies (TIPS), said the report raises a number of key considerations before one could embark on the electric vehicle journey in South Africa.
Montmasson-Clair said while the report was clear that there is a need for a policy framework aimed at fostering the sector, it requires consideration of multiple angles with several key questions considered, covering both market development and industrial development.
On the market development front, the first question related to how the offer of passenger electric vehicles could be supported. “This is critical to ensure that electric vehicles are available on the local market, and customers are enticed to buy them.”
The second question deals with the rollout of electric vehicles in South Africa’s public transportation system. Public transport enables society-wide benefits by bringing the technology to all, particularly low-income households.
On the industrial development front, the first question considered how to promote the manufacturing of electric vehicles(cars, buses and minibuses) in the country. Promoting an equitable rollout of electric vehicles in the country hinges on simultaneously tackling the private and public passenger transport markets, where the high upfront cost represents the biggest barrier. This could be addressed by a reduction in the VAT and/or ad valorem excise duty on electric vehicles would be an effective avenue to support the market.
The report said a partnership between Development Finance Institutions (DFIs) and local banks to provide low interest rate to electric vehicles buyers would also improve the cost competitiveness of electric vehicles.
Increased local demand would also support domestic manufacturing. This is particularly evident with electric buses and minibuses. In addition, consideration should be given to a mineral beneficiation policy (such as an export tax) to support manufacturing of electric vehicle-specific components, such as batteries, electric drivetrains and fuel cells.
Overall, the report said that strong signals are required to kickstart the development of electric vehicles in South Africa.
Layton Beard, the Automobile Association spokesperson, said the association supports efforts for a better environment, including the introduction of electric vehicles, and that the current fuel price hikes would not have any impact on such a transition. He said it required a variety of factors to be considered before electric vehicles grew in popularity.
Once motorists recover from the fuel price shock on Wednesday, perhaps, there may be louder calls for faster moves towards electric vehicles?