By: Tim Abbott

BMW's Tim Abbott contends that, with favourable legislation and the requisite infrastructure, an electric-vehicle market will take hold in South Africa

There is no doubt that the long-term future of automotive mobility includes electric drivetrains. In 2016, nearly 774 000 electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) were sold worldwide, pushing the number of electrically powered vehicles on global roads over the two-million mark. While that figure may represent only 1.1% of international vehicle sales, cuts in global emissions targets and a drive towards sustainability, as well as energy saving in the automotive sector, mean that the future trajectory of electric drivetrains has been accelerated.

The current growth in EV and PHEV sales is largely attributable to incentives and legislation put in place by governments, with aggressive emissions targets only attainable if electromobility is embraced on a massive scale. China is one of the leading markets for EVs and PHEVs, with over 500 000 EVs sold in 2016. One of the motivations behind the rapid adoption of EVs in that country’s major cities is their exemption from licence plate lotteries and the significant registration fees that apply to vehicles with internal-combustion engines. In all, China provides subsidies that amount to 23% of the price of a mid-size EV.

While the 23% subsidy provided by the Chinese government may seem staggering, consider that the prices of EVs and PHEVs in Scandinavian countries are subsidised by as much as 49% (Denmark) and 45% (Norway). Subsidy percentages are lower elsewhere, but still significant: the US subsidises purchase prices by 18%, Germany 13% and Japan 10%. In the UK, the largest market for EVs in Europe, the introduction of the 2017 Automated and Electric Vehicles Bill means that, besides other things, every petrol station and motorway service centre must install electric charging stations. It also establishes common technical and operational standards for the charging stations. The aim of the UK government is for the country to “lead the world in EV technology and use”, with almost every car and van to be zero-emission by 2050.

The BMW group started its electromobility journey in 2008, when it began testing its MINI E fleet worldwide. The results gleaned from the tests not only formed the basis for the group’s global electromobility strategy but were also integrated into the BMW i range, which features the group’s first fully electric production car, the BMW i3, and the revolutionary BMW i8 PHEV – the most progressive sports car.

The BMW i is the innovation driver for the BMW group, which has successfully transferred the technology featured in the BMW i8 to models within BMW and MINI – firstly with the introduction of the BMW iPerformance model range and recently the MINI Cooper SE Countryman ALL4. The eDrive technology featured in the BMW i3 has been transferred to the first fully electric BMW X3, which will make its debut in 2020, as well as a fully electric MINI, which will be introduced in 2019.

Our long-term goal is to offer customers the broadest range of electrified premium cars. By the end of 2017, we will offer ten models, and, by 2025, the number will increase to 25 – 12 of which will be pure electric.

This year alone, the BMW group will deliver 100 000 electrified vehicles to customers, which will mean that, by the end of 2017, there will be more than 200 000 BMW group electrified vehicles on the road.

The BMW group’s global electromobility strategy includes South Africa. Since market introduction in March 2015, a total of 439 BMW i models have been delivered to customers in South Africa. In terms of the BMW i3, a total of 227 units have found homes, making it the most successful EV ever launched locally, while the BMW i8 is the market leader among PHEVs, with 232 units delivered to customers. While we are proud of the strides we have made in this young electromobility market, the role of legislation in the development of the EV market is pivotal – as clearly evidenced by global trends.

One of the biggest stumbling blocks to a competitive EV market in South Africa is the current rate of import duty tax of 25%. Imported petrol and diesel vehicles with engine capacities below 1 ℓ attract 0% duty, and other traditionally powered imported vehicles under European Union trade agreements attract duties of 18%. In December 2016, BMW Group South Africa submitted a formal application to the International Trade Administration Commission of South Africa for the reduction of the import duty on pure EVs. The submission calls for a 0% duty on the import of all EVs for a period of three years and for a 10% import duty to be applicable thereafter.

It is our belief that a reduction in the import duty on EVs will create a more competitive market, with a wider offering to customers and the added benefit of attracting potential long-term investment in electromobility in South Africa.

We believe that a reduction in import duty tax will not only make EVs more affordable but also give the whole automotive industry the means to contribute to the expansion of a public charging network. Alternatively, government can support the growth of the EV market without a direct monetary subsidy by introducing measures for EVs, such as designated parking areas, the use of bus lanes during peak traffic times and exemption from toll fees.

Our approach to electromobility is holistic and is typified by our 360º ELECTRIC strategy, of which the introduction of public charging infrastructure is key. Range anxiety remains a stumbling block for many would-be buyers of EVs in South Africa, which is why a more comprehensive charging network is critical to mitigating the anxiety.

With the market introduction of the BMW i, we established a nationwide public charging network of 54 charging stations, free for customers with ChargeNow cards. In Scandinavia, public charging stations are abundant in large cities. There is no reason why this cannot be the case in South Africa.

The proposed review of the import taxation issue is the first step in a long journey; over time, further adjustments may be required to enable sound thinking to become good practice. This is when we will see the benefit to all manu- facturers who currently offer or have plans to introduce EVs in South Africa. More importantly, this is when we will see the conversation around electromobility take on real meaning.

The BMW group will continue to be at the forefront of these conversations, helping bring about real, sustainable change in the electromobility field.

Abbott is CEO of BMW Group South Africa and sub-Saharan Africa