NHLANHLA SOPHAZA: Time is running out for SA in the race for electric vehicles

The global electric vehicle (EV) stock just hit over 10-million. According to EV-Volumes, in 2020 electric vehicles represented 4.2% of global vehicle sales. For the first time Europe has surpassed China and become the fastest-growing EV market.

Yet SA’s electric vehicle sales make up less than 1% of total vehicle sales in the country to date. The only impressive data SA has concerns the ratio of charging points to EV stock, which, according to the International Energy Agency (IEA), puts us among the top five in the world. But that is largely due to low EV sales.

Our automotive industry is a key contributor to the manufacturing sector, responsible for about 6.4% of GDP and 27% of manufacturing output. The Electric Vehicle Market Intelligence Report for 2021 from GreenCape highlights the automotive industry as an employer of note in SA, employing up to 900,000 people directly and indirectly.

Data from Naamsa (formerly the National Association of Automobile Manufacturers of SA) indicates that we export roughly 50% of our vehicle production, largely to Europe. Considering that the EU is the fastest-growing EV market, it is a no-brainer that SA should be following the same trend. But we are not.

Our failure to harness the benefits accruing with an early adoption of the manufacture, promotion and use of the switch to EVs jeopardises the economic life chances of stakeholders in this sector.

As an upper-middle-income economy, SA has a Gini coefficient of 0.63 and an unemployment rate hovering at 32%, one of the highest recorded in countries with a similar profile in the world.  These are serious challenges for the country and require us to pull out all the stops to ensure our automotive industry is not disrupted by global EV adoption.

In anticipation of the rapid growth of transport electrification taking place globally, the government has published for comments a draft green paper on the advancement of new energy vehicles in SA.  Other countries in Africa are already making headway with the e-mobility revolution. For example, Ethiopia recently announced the establishment of an assembly line for the Hyundai Kona SUV model, which will be a 100% electric-powered vehicle. This is in addition to the existing assembly line for the Ioniq EV sedan model, which was introduced last year.

In this context, the big question is why SA seems to be lagging behind, why the government and car manufacturers have moved so slowly in making the changeover. The answer could lie in the huge subsidies required to kick-start EV adoption. Data from the IEA shows that governments across the world spent $14bn on direct purchase incentives and tax deductions for electric cars in 2020, a 25% increase year on year.

Analysis by Kilo Electric (an SA EV mobility specialist company) estimates that SA will need R386m to roll out an essential public charging network for a 5% EV market penetration with a ratio of 15 charging points per EV. The analysis suggests a sacrifice of R4bn in tax revenue with a price cap of R600,000 for 20,000 EV models. 

EV uptake is driven by the availability and accessibility of electric charging infrastructure. Starting with a charging network to address concerns of consumers on the verge of buying an EV is essential to stave off the stress of being stranded on the road in the middle of nowhere with a flat battery. This in itself is an economic sector that should be easy to set up given the existing service station network in SA. In addition, it presents opportunities for investment in new business.

Today’s EV range of an average of 200km more than covers the daily travelling distance needs of most consumers. However, it is important to provide sufficient geographic coverage to ensure that as ownership increases most EV drivers will have convenient access to charging facilities. The benefits for transport electrification are savings in transport costs and a reduction of greenhouse gas emissions towards net-zero targets, which SA is yet to announce and commit to.

SA-born Elon Musk has been a pioneer in the mass production of passenger EVs through his US-based company, Tesla. Another global player in the area of all electric industrial vehicles such as front-end loaders and excavators is Greenland Technologies.

We await the government’s lead on EV adoption in SA, which hopefully will happen this year. But time is not on our side. Electrification of our transport system is inevitable, so burying our heads in the sand serves no purpose. We will not make the e-mobility revolution go away.

• Sophaza is an e-mobility specialist consultant.