Electric vehicles: SA must change its attitude to electric vehicles
Country penalises EV buyers through higher import duties and tax intended for luxury goods
The government must change its attitude to electric vehicles (EVs) within three years or risk the local motor industry becoming globally irrelevant, says Jaguar Land Rover SA director Brian Hastie.
Multinational motor companies are spending billions of dollars on developing EVs and many countries are offering tax breaks and other incentives to encourage consumers to buy them. SA, however, penalises EV buyers through elevated import duties and a tax intended for luxury goods.
Globally, nearly 3-million EVs will be sold this year. In SA the number is likely to be below 400. More critically, Hastie told a seminar organised by the SA Institute of International Affairs (SAIIA), the local motor industry manufactures almost no EVs.
The only company to do so is Mercedes-Benz SA, which builds a small number of C-Class hybrid cars, powered by a combination of electric and petrol engines. These are all exported.
The SA motor industry exported more than 50% of production so it could not ignore what is happening elsewhere, Hastie said on Thursday. To remain relevant, the industry needed to build EVs or risk losing markets.
The government has said it is in favour of local manufacture, with trade and industry minister Ebrahim Patel repeating the message recently. But most multinationals are unwilling to build vehicles in countries where there is no strong domestic demand. With the exception of Mercedes-Benz SA and BMW SA, which export more than 90% of production, other companies sell many of their SA-made vehicles locally.
From 2021 an updated version of the government-driven automotive production and development programme (APDP) will guide motor companies’ investment and product plans. So far, there has been little sign of a shift towards EVs.
Hastie said SA consumers, given the chance, would accept pure-electric or hybrid EVs. Former resistance to diesel-powered cars had been quickly overcome once consumers were convinced they would not sacrifice performance or value. The same could happen with EVs which, according to SAIIA research director Neuma Grobbelaar, cost 20% less to run than vehicles with conventional internal combustion engines.
Instead, elevated duties pushed them out of the price reach of most consumers. Hastie estimated that some EVs could treble sales with a reduction in duties.
Grobbelaar said SA had “a very short window” to prepare for the flood of EVs expected to hit global markets. According to some analysts, they are expected to account for 3% of global car sales in 2020, 11% by 2025 and more than 50% by 2040.
While the internal combustion engine won’t disappear for decades to come, some countries have announced plans to outlaw it in the next few years.