13 Oct Industry’s EV Roadmap aims to accelerate Sales and Production
South Africa needs to kick-start the production of electric vehicles (EVs), while it also needs to sell more EVs.
This was the single most important recommendation from a Trade and Industrial Policy Strategies report on ‘Harnessing EVs for Industrial Development in South Africa’, released earlier this year.
The report was compiled for the Department of Trade, Industry and Competition and naamsa | The Automotive Business Council.
The South African automotive industry –the country’s biggest manufacturing sector – produced a record number of vehicles last year, at 631 983 units.
According to the 2020 Automotive Export Manual, 387 125 vehicles, worth R148-billion, along with R53.7-billion worth of automotive components, were exported from South Africa to 151 countries last year.
The broader automotive industry’s contribution to South Africa’s gross domestic product reached 6.4% in 2019 (4% manufacturing and 2.4% retail).
The European Union, with exports of R129.7-billion, or 64.3% of the total export value of R201.7-billion, was the domestic industry’s main export region last year.
“This is exactly where the problem lies,” says naamsa | The Automotive Business Council CEO Mike MABASA.
“In 2030, 40% of all vehicle sales in Europe may be EVs, and we believe that number can increase to 80% by 2040.
“It is clear that we cannot ignore EVs if we want to continue doing business with Europe. It will have a huge impact on the country if we lose R201-billion in export earnings a year.
“We don’t want our main export markets to say that they are no longer interested in ICEs (internal combustion engines) because of their emission targets, and that they are taking their business elsewhere. We need to remain relevant.
“The change in our industry is going to be driven by how we redefine mobility; the convergence of connectivity; electrification; and changing customer needs – not just for our local consumption needs, but for other markets around the world as well.”
This is why naamsa | The Automotive Business Council and its more than 40 CEOs – who include leaders of South Africa’s seven local original-equipment manufacturers (OEMs, or vehicle manufacturers) and the numerous importers – are developing a roadmap that will aim to integrate South Africa in the global EV value chain.
“The reality is that the world is changing to EVs, and fast, and we need to embrace that change,” says MABASA. “We are steadily moving from an industry that, for 100 years, has relied on vehicles that are standalone, mechanically controlled and petroleum fuelled, to automobiles that will soon be interconnected, electronically controlled, and fuelled by different energy sources and drivetrains.
“There is a general acknowledgement among the naamsa | The Automotive Business Council CEOs that we shall have to think differently in the way we perceive the electric revolution, especially if we don’t want to lose our export markets and face significant job losses at our plants.”
All seven local OEMs currently produce ICE vehicles.
The first pillar of the Naamsa EV roadmap is to stimulate EV demand among the general car-buying public in South Africa.
“Our first phase focuses mostly on importing more EVs into the country,” says MABASA. “This is to familiarise people with this type of technology and how it works.”
South Africa currently has four full EV models available: the Jaguar I-Pace, the BMW i3, the Mini SE (launching this month), and the Nissan Leaf, although the Leaf has all but disappeared from showroom floors. Other manufacturers, such as Volkswagen, Porsche and Mercedes-Benz, are all testing models with the aim of local introduction.
“It costs more than R600 000 for the cheapest EV,” says MABASA.
“We need to improve the affordability of EVs. All naamsa | The Automotive Business Council manufacturers are now looking at their global product portfolios to see if they can source less-expensive EV models for the local market.
“We also want to look at public transport, where there is a good opportunity for minibus taxis and buses to go electric,” notes MABASA.
Pivotal to the affordability challenge is an effort to reduce the import duties on EVs.
To import a battery EV from Europe costs 7% more in import duties (25%) than an average ICE car (18%).
“naamsa | The Automotive Business Council will urge government to reconsider reducing these import duties in order to stimulate demand,” says Mabasa.
“We want the import duties to be zero per cent for a three-year period in order to kick-start demand.
“We would also like the battery cost to be excluded from the ad valorem tax charged on motor vehicles. If a car costs R250 000, and the battery is R50 000 of that, say, then government should only charge ad valorem on the R200 000.
“We will not request a VAT reduction, as we understand that government is currently under pressure owing to the Covid-19 crisis.”
Made in SA
The second pillar of the EV roadmap is focused on the local manufacture of EVs.
“We need to look at what we can do to reposition the local industry to invest heavily in EV manufacturing capacity,” says MABASA.
“There are local OEMs that are already thinking about extending their production lines to include EVs, although their parent companies have not necessarily signed off on this yet.
“Any manufacturer that will change model production in the next four to five years will need to start preparing to include an EV or hybrid production line.”
While the local OEMs negotiate with their principals to make this happen, naamsa | The Automotive Business Council will engage government to revisit the Automotive Production and Development Programme (APDP) to ensure that it also covers EV vehicles and components, says MABASA.
The APDP is government’s support programme for the local automotive manufacturing industry.
“These conversations with government should start now, so that our OEMs can present EV production options to their principals when the time comes for investment decisions to be made,” says MABASA.
If the South African automotive industry is to sell more EVs, the availability and quality of charging infrastructure should expand in tandem, says MABASA.
“You should be able to drive from Phalaborwa to Pretoria without fear of getting stuck next to the road.”
While the country already has a (not so dense) charging grid, there is a need for more fast chargers that can charge an EV in 30 minutes or less. Facilities for a quick battery change should also be made available, says MABASA.
There is also a need to accelerate the development of a common billing practice for the use of charging infrastructure, he adds.
“It’s the same as using any bank card at any ATM. We need common charging infrastructure and billing systems that can work for all vehicle brands.”
MABASA says naamsa | The Automotive Business Council will also talk to the country’s petroleum companies in an effort to convince them to roll out EV charging infrastructure.
“South Africa has this wonderful infrastructure across the country. Why build new infrastructure?”
A second engagement will be with energy provider Eskom.
“We need to see how we can accelerate the introduction of EVs without causing any issues around power supply,” says MABASA.
“We are also going to talk with independent power producers, as we believe some charging stations should be powered by alternative, clean energy.
“We cannot simply erase the benefit of zero-emission EVs by charging them with electricity produced by coal.”
EDITED BY: CREAMER MEDIA REPORTER