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Can South Africa really transform itself from an electric vehicle (EV) wasteland into a model global citizen in three years?

Naamsa said this week that it and the department of trade, industry & competition (DTIC) share a vision — that new-energy vehicles (NEV), made up almost exclusively of EVs, will comprise 20% of South Africa’s new vehicle market in 2025, rising to 40% in 2030, then 60% in 2035.

That’s quite a vision when you consider that in 2022, the share was less than 1% — 4,674 vehicles out of 528,963. Still, they say that if you don’t dream big, you won’t achieve big.

How will they get there? Transforming the local vehicle manufacturing and buying landscape is a huge ask. How huge is made clear in a discussion document published by Naamsa this week.

Globally, says the document — “South Africa’s New-Energy Vehicle [NEV] Roadmap” the motor industry will spend $515bn by 2030 to move away from petrol- and diesel-driven internal combustion engines (ICE). The shift may not be absolute; among various emissions-free fuel solutions, including hydrogen, scientists are trying to create ICE-friendly, carbon-neutral substitutes.

No firm figure has been placed on the transitional cost to South Africa. Whatever it is, says the industry, it must be borne. Of 555,889 vehicles built in South Africa last year, only 5,288 were EVs. Those included 2,711 traditional hybrids, in which a petrol motor continuously regenerates an electric battery, and 2,577 plug-in hybrids, which, as the name suggests, also have a petrol motor but need the electric batteries recharged by an external power source.

Traditional hybrid numbers would have been greater but for the four-month shutdown of Toyota South Africa’s Durban assembly plant because of floods, halting production of the Corolla Cross. Mercedes-Benz South Africa is the only local manufacturer currently making plug-ins.

What no-one makes here yet is battery-electric vehicles (BEVs), which are wholly reliant on plug-in charging. Many developed countries are going flat-out for this technology. South Africa, however, is certain to lean on hybrids in the short to medium term. In the next few years, Naamsa and the DTIC expect them to account for at least half of South African EV sales.

The South African industry’s dependence on ICE technology is a problem because over 50% of cars and commercial vehicles manufactured by South Africa’s seven major manufacturers are exported to the UK and EU, where sales of ICE vehicles will be outlawed in the next few years. In some countries, hybrids will be phased out soon after. If the local industry doesn’t adapt quickly, it could shrivel and die.

To achieve further growth, rather than just recovery, will require wholesale change in policy and mindset

Some shrivelling is already happening — though not related directly to the ICE-NEV divide. Under the original terms of the government’s 2021-2035 South African Automotive Master Plan, the industry set out to more than double 2019 vehicle production of 632,000, to 1.4-million.

Thanks to Covid, that’s no longer feasible, says Naamsa, which expects production to return to 2019 levels only in 2024. To achieve further growth, rather than just recovery, will require wholesale change in policy and mindset. Oh yes, and a whole heap of money.

There are fewer than 400 public charging stations around South Africa at the moment. Naamsa says that according to the findings of a joint study with the DTIC, by 2035 the required number could be as high as 262,000 if consumers switch wholesale to NEVs. Based on 2021 rand values, the bill would be about R30.8bn — annualised at just over R2bn.

But that’s only if the stations draw power from Eskom — a nightmare scenario for EV owners. Throw in renewable energy, such as solar or wind, and the total bill could almost treble, to R90bn.

Naamsa stresses that a successful transition to NEVs must be three-pronged. Besides demand for national charging infrastructure, vehicle and components manufacturers need incentives to invest, and consumers need incentives to buy.

The discussion document recommends NEV manufacturing incentives beyond those available to ICE production, and temporary duty rebates on critical components currently not freely available in South Africa. It also suggests a temporary reassessment of the 60% local content required for locally made vehicles to land duty-free in the UK and EU. That target is not feasible on EVs unless the high-cost battery packs are made here, which is unlikely to happen soon. Only two of South Africa’s seven major vehicle manufacturers build ICE engines.

When it comes to consumer incentives, the government has preached caution because of the potentially unquantifiable costs involved — and the fact that, given the relatively high price of most EVs, well-off buyers would benefit initially.

Naamsa, though, says the government can make an immediate price dent by reducing South Africa’s EV import duty from 25% to 18%, the same as that on ICEs. Further, it says that if the government offers consumer incentives, manufacturers will match them.

Motor companies putting their hands in their own pockets? That, more than anything, shows the urgency of the situation.

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