DAVID FURLONGER: Going electric is not for penny-pinchers

Britain will have to invest up to R590bn in the manufacture of electric-vehicle (EV) batteries by 2040, if it hopes to meet its demanding zero-emission automotive targets, says the Faraday Institution, the country’s flagship battery research programme.

The institution reckons Britain will need seven battery “gigafactories” costing up to ₤4bn each – or ₤28bn in total. The first is currently under construction in the northeast of England.

The estimate was reported this week by the London Daily Telegraph. Scarily, it refers only to batteries. It does not include the cost of designing EVs, building motors, developing software and upgrading assembly plants. Globally, major motor companies have committed more than $300bn to EV development.

Are these numbers relevant to SA? Certainly. For while the local motor industry is unlikely to attract that sort of money, it is a reminder of the ridiculous sums required for an all-electric future.

SA is just starting out on the journey. The government is due to publish an EV policy white paper soon. It hopes not only to encourage the local sale of EVs but also to persuade local vehicle manufacturers to build them. More than 60% of SA-built vehicles are exported, mainly to countries that will ban new petrol and diesel engines in the next few years. Yet, with a few exceptions, that is all SA motor companies make. There are some hybrids – using dual electric and liquid-fuel motors – but even those will be outlawed before long.

SA’s biggest export market is the UK, where the sale of new vehicles driven by internal combustion engines (ICE) using petrol and diesel will be banned from 2030. Hybrids will have a five-year window before they are outlawed after 2035. Old ICE vehicles will still be allowed on the roads but most will be gone by 2040.

Despite its zero-emission intentions, the UK motor industry shares many features with SA’s. Some years ago, it was one of the world’s biggest. Now, because of underinvestment and the emergence of low-cost industries in Asia and Eastern Europe, it is slipping down the table. In the past five years, says the Telegraph, annual production has slipped from 1.7-million to below 1-million.

It’s still considerably bigger than SA but it’s interesting that while SA’s optimistic medium-term target is 1.4-million, the UK’s is only fractionally bigger, at 1.5-million. Both countries face an uphill battle to not only meet their goals, but to do so with new-generation vehicles.

In some respects, SA’s could find growth easier. The UK has committed itself unreservedly to EVs. So have some multinational motor companies. Some, though, have taken a step back and are hedging their bets. Many countries, particularly in the developing world, are nowhere near ready for an EV future.

A recent Financial Times report observed: “Although carmakers are agreed that developed areas where regulators are pushing hardest, such as Western Europe or China’s megacities, will become major electric markets in the space of a decade, they are sceptical that lower-income economies will keep pace.

“Currently, EVs account for just 1% of sales outside of Europe, China and the US … and countries with patchy power grids will take much, much longer to catch up.”

Much of Africa, whatever some industry executives say, is decades away from an all-EV future and SA is in a strong position to cater to both markets – building both ICE and EV products.

Some industry executives are also not convinced that “green” vehicles are truly “green”, once supply chains and electricity generation are taken into account. Sceptics continue to argue that the environmental impact of mining for raw materials, and the carbon impact of international transport, outweigh the green advantages.

Whatever the doubts, there’s no denying that EV demand is taking off. A study by the GlobalData consultancy reports: “EVs as a proportion of new light vehicle production will rise from 5% in 2021 to 11% in 2025, with annual EV production exceeding 10-million units.”

It adds: “The shift towards EVs has mainly been driven by environmental, social and governance-related legislative changes, but momentum is also becoming led by demand. Last year’s energy crisis means people don’t want to be so reliant on global supply chains, accelerating the move away from petrol and diesel. Consumers are also becoming more environmentally conscious – particularly Generation Z.”

China will continue to dominate the market, says GlobalData. “In 2020, 48% of all EVs on the road could be found in China — more than the combined figure for the US and Europe. China’s EV fleet will be 60% of the world’s total by 2030.”

To guarantee its dominance, both of sales and manufacture, the Beijing government has introduced policies that have caused even Tesla to lose market share in China, says GlobalData. ​