Naamsa wants 23% import fee on electric cars dropped, to boost sales
BMW’s i3 is one of only two electric vehicles available in SA, and only 620 units have been sold
Nissan, BMW and Volkswagen (VW) are among carmakers in talks to bring the electric-car revolution to SA, as the nation’s car factory floors risk being left behind in the global switch to greener vehicles.
The industry is preparing a unified stance on electrification to present to the government by the end of 2019, Mike Mabasa, CEO of the National Association of Automobile Manufacturers of SA (Naamsa) said in an interview.
Among the goals is persuading legislators to reduce or drop a 23% import tariff on electric vehicles to help ramp up nascent domestic sales, he said. Another is to roll out a charging infrastructure in a country where the state-owned power monopoly is in deep financial crisis.
Taking steps to boost the popularity of electric vehicles in SA is just one part of the equation. The vehicle manufacturing industry makes up about 7% of the country’s economy, according to Naamsa. The sector is one of the more positive aspects of an economy expected to grow at less than 1% for a second consecutive year.
“The country needs to move forward and bring new technologies,” said Mike Whitfield, Nissan’s chair for the Southern Africa region. “The rest of the world will move very fast and if we don’t get going we will be left behind.”
SA has long been a hub for global carmaking, attracting plants operated by seven carmakers from Toyota to Isuzu. In 2018, the manufacturers exported almost 210,000 cars to Europe, where Volkswagen is already retooling factories to only make electric cars. That is just under a third of all local production and makes up 60% of exports.
To date, there are no firm plans for electric-car or hybrid production in SA, but the government and industry agreed in 2018 to extend a manufacturing incentive program, creating jobs and enabling models like the BMW X3 sport utility vehicle and Nissan’s Novara pickup to be produced locally.
“The electric-vehicle play in SA will not be determined by the SA consumer, but by the requirements of export markets,” Martyn Davies, a vehicle industry specialist at Deloitte said by phone from Johannesburg, adding that the weaker rand is also making exports more attractive.
The quality of the local plants of BMW, Ford and Mercedes-Benz are good enough to make retooling quite straightforward, he said, adding that the next product made in SA by those carmakers could feasibly be electric.
Under the terms of the new manufacturing plan, the carmakers will have to more than double annual production to as many as 1.4-million vehicles by 2035, and that won’t happen without making electric cars as well as petrol or diesel, according to Naamsa’s Mabasa.
BMW’s i3 is one of only two electric vehicles currently available in the birth country of electric car pioneer Elon Musk, and only 620 units have been sold. Jaguar Land Rover introduced the I-Pace earlier in 2019, while Nissan is holding off on the launch of the latest Leaf until after an agreement is reached on import tariffs.
Elsewhere in Africa, a plan by VW to introduce an electric vehicle in Rwanda stands in contrast to a lack of other developments.
Another barrier to an accelerated electric-car boom in SA is Eskom, which reported an annual loss of R20.7bn and requires a massive government bailout over the next three years.
The utility has been forced to implement intermittent rolling blackouts and is reliant on coal, which is out of step with the environmentally friendly advantages of producing electric cars, Mabasa said. Therefore, the industry paper is likely to lay out a mixture of power sources between Eskom and privately-owned renewable energy projects, he said.
But the need to turn around Eskom’s financial situation is likely to be of more pressing concern to the government than using it to enable the electric-car industry, Nissan’s Whitfield said.
“There is excess capacity, but quite frankly Eskom’s issues have to be addressed or we will have much bigger problems,” Whitfield said.
With Prinesha Naidoo
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