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EV revolution to be felt in SA in 2022, but affordability concerns linger

29th October 2021

By: Irma Venter

Creamer Media Senior Deputy Editor

     

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South African new-vehicle buyers will have a choice of about 20 battery electric vehicles (BEVs) by 2023. This is a significant jump from the current four models available in local showrooms.

While electric cars have been rapidly gaining traction abroad, especially in Europe and China, South African consumers have been slow in warming to this new technology since the 2013 arrival of the country’s first BEV – the Nissan Leaf.

There are many reasons South Africans have been hesitant to invest in BEVs, including the limited travel range on first- generation electric cars, uncertainty about power supply from State-owned power utility Eskom, limited model choice and availability, as well as pretty steep price tags, compared with internal combustion engine (ICE) vehicles.

Now, however, the BEV has finally moved beyond the quirky and into the mainstream. Driving range has improved to 400 km and more, and battery prices are coming down as economies of scale are becoming a reality.

It is no longer a question of if, but rather when South Africans will drive and own their first electric vehicle.

Limited Range
There are currently only four BEVs that South Africans can buy from the showroom floor, says uYilo eMobility Programme director Hiten Parmar.

These are the BMW i3, Jaguar I-Pace, Mini Cooper SE, and Porsche Taycan. (Even though Volvo Car South Africa earlier this year received a limited order of the XC40 P8 Recharge sports-utility vehicle (SUV), there are currently no vehicles available to local customers.)

The uYilo eMobility Programme was established in 2013 as a multistakeholder, collaborative programme focused on enabling, facilitating and mobilising emobility in South Africa. uYilo is an initiative of the Technology Innovation Agency, which is an entity of government’s Department of Science and Innovation.

Parmar says South Africa sold a total of 710 BEVs from 2013 to the end of June this year. Plug-in hybrid vehicle (PHEV) sales for the same period numbered 690 vehicles. Mild hybrid-electric vehicles (MHEV) sales have reached 5 116 units.

(For the purpose of this article, the term electric vehicle, or EV, refers to PHEVs, MHEVs and BEVs.)

In comparison, in Europe, the BEV market in the European core regions grew by 147% year-on-year in the first six months of 2021, with a total of 336 000 units sold, while PHEV sales increased by 248%, to 350 000 units.

In July, Norway achieved monthly car sales volumes of 4.4% for petrol and diesel vehicles, while BEVs made up 63.2% of the sales mix, PHEVs 21.2%, and MHEVs 7.2%.

China is moving as rapidly as the European Union (EU), with the US also inching in the same direction under the leadership of Democratic Party President Joe Biden.

Vehicle maker Ford has, for example, unveiled the Ford F-150 Lightning pickup truck, the all-electric version of the most popular vehicle in the US.

The main driver of surging global EV sales is a strong move towards cleaner air and pollution reduction, supported by the necessary legislation. The EU, for example, aims to ban all nonelectric cars from 2035 onwards.

Why is SA Lagging?
Affordability has been noted as the main factor inhibiting local BEV sales, says Parmar.

Other factors include the need to create greater awareness about BEVs and BEV charging options.

For example, it is possible to charge a BEV at home most of the time, and not at public charging stations, owing to the rapidly increasing BEV travelling range.

Also, charging at night could mitigate the risk of restricted power supply from Eskom, owing to load-shedding.

“On the note of affordability, currently, customs and excise duties for ICE vehicles imported from the EU are at 18%, while EVs from all regions are 25%,” says Parmar.

“Additional to this is ad valorem duty and value-added tax.”

BEVs abroad are often sold with a number of incentives, such as tax breaks.

Another problem, adds Parmar, is that the current local BEV offerings are all premium passenger vehicle models, which means that they are simply unaffordable for the majority of South Africans.

“South Africa’s current stock of BEVs and PHEVs are approximately at 0.014% of the national car parc, which is not anything to be proud of, considering BEVs were first introduced in 2013, and PHEVs in 2015.

“We do, however, acknowledge increased BEV model introductions in South Africa in 2022, which will begin to change the landscape.

“But, again, these are premium passenger- car models. South Africa will only have higher market growth when more afford-able BEVs are included in the local offering.”

Parmar notes that further growth is also expected once the customs and excise duty structures are reviewed.

“This is one of the points addressed within the Auto Green Paper from the Department of Trade, Industry and Competition (DTIC), which is still to be tabled at Cabinet for approval.”

The cheapest BEV in South Africa is the Mini Cooper SE, at R658 000.

Price Parity?
The premium sector is indeed the market segment that will inaugurate the era of new mobility in South Africa.

This is, to a great degree, made possible by the fact that a number of global premium vehicle makers have declared that they will soon only manufacture EVs, with ICE vehicles to be phased out of their production line-ups.

Jaguar, Volvo and Mini have, for example, opted to take this route, from as soon as 2025 or 2030, meaning customers will have no other choice but to buy an EV if they want to support these brands.

“For me, the big challenge in EV adoption in the African market and in South Africa, in particular, has been the availability of appropriate models,” notes Bloomberg NEF senior associate Andrew Grant.

Grant is born and bred in South Africa, but currently works for the research house at its UK office.

“When you look at the vehicles sold in South Africa on the EV side, a lot have been high-end luxury vehicles not really designed for mass-market adoption,” says Grant.

“What you are seeing now is that vehicle prices are coming down, and automakers realise that they can produce entry-level or mid-market vehicles at an economic level, and sell those in a market like Africa and South Africa.

“I think you are going to see a lot of Chinese automakers coming into the African market over the next decade, so the model availability will be there and that will certainly increase the chances of strong EV adoption.”

“There certainly are a lot of challenges in place,” adds Grant. “But, as more models become available, and become available for the types of driving conditions and trips that African and South African consumers want to make, you will see more of an uptake of EVs.”

Bloomberg NEF expects a BEV to cost as much as an ICE vehicle from 2023 onwards, depending on the segment and market. For small vehicles, this could be from 2024 onwards.

What about Hybrids?
One debate in the new era of electromobility circles around whether consumers should not rather jump from ICE vehicles straight to PHEVs and BEVs, instead of buying a MHEV as a bridging vehicle, as MHEVs do not cultivate the habit of plug-in charging.

MHEVs are also not viewed as a long-term solution, as they will eventually be banned in many countries, owing to the fact that they have a strong ICE component.

“It’s tricky,” says Grant. “Hybrids have a role to play for automakers to meet their emission targets in Europe.

“It seems to make sense for South Africa to push hybrids versus BEVs and PHEVs at the moment, as the incentive structures for [BEVs and PHEVs] are not currently in place in South Africa.

“And, electricity availability and consistency of power provision are a bit alarming if you want an EV.

“In a lot of cases, it seems hybrids are a good near-term solution,” says Grant. “However, investment in developing new forms of this technology will be drying up over the next few years, and there will be a switch to more vehicles with plugs.”

The Germans are Coming
Audi will form part of a strong German onslaught on the BEV premium market in South Africa over the next two years.

Audi South Africa (Audi SA) says it will launch its all-electric e-tron model range in the local market in the first quarter of next year.

This will include six different e-tron derivatives across three different categories – which means the launch will already more than double the range of BEVs available in South Africa today.

In the SUV category, this will include the Audi e-tron 50 and e-tron 55; in the crossover-utility vehicle category, the Audi e-tron Sportback 55 and e-tron Sportback S; and in the high-performance category, the Audi e-tron GT and Audi RS e-tron GT.

“Across the world, the automotive industry is announcing plans to phase out combustion engines to advance the transformation of the industry for the future,” says Audi SA head Sascha Sauer.

“Our planned entry into the South African market with a full fleet of electric vehicles signifies our confidence and commitment to the development of the category, and to stimulate local demand for premium sustainable mobility, as a starting point.”

Porsche Centre South Africa says the new Porsche Macan will be available in South Africa as an all-electric variant from 2023.

“Until then, we will continue to offer the Taycan range of electric vehicles.”

Yet another German premium carmaker, Mercedes-Benz, says it will have BEVs in all segments the company serves by next year.

“From 2025 onwards, customers will be able to choose an all-electric alternative for every model the company makes,” says Mercedes-Benz South Africa.

“Locally in South Africa, we will be introducing our all-electric Mercedes-EQ range in 2022. The models will include the EQA, EQB, EQE and EQS.”

The current frontrunner in the South African BEV market is BMW, with 455 i3s having been sold up to the end of June this year. (Second is the discontinued Nissan Leaf, at 94 units, and in third place the Jaguar I-Pace, at 72 units.)

“In addition to the BMW i3 and MINI Cooper SE, which are already available in the South African market, two key innovation flagships will be on South African roads before the second quarter of 2022: the BMW iX and the BMW i4,” says BMW Group South Africa.

“They will be joined early in 2022 by the BMW iX3.

“As BMW Group South Africa, we are committed to supporting the growth of the EV segment in this country, and will continue to honour our commitment with an increased range of EVs,” notes the German company, which also has a manufacturing plant in South Africa.

“While there are currently no government incentives to encourage customers to purchase EVs, the Auto Green Paper published earlier this year by the DTIC points to a wide-reaching shift in policy.

“We are working closely with government and other stakeholders in the country to advance the electromobility agenda in South Africa. We welcome any developments that can encourage the wider adoption of electromobility in South Africa. This includes expansion of infrastructure projects, and an environment that supports the local manufacture of EVs and EV components, especially since ours is an export-oriented industry.”

While not a German brand, Italian sports-car maker Maserati says the Maserati Ghibli hybrid made its debut in South Africa in February this year, and will soon be followed by the Maserati Levante hybrid SUV in November.

“In the next few years, our customers can expect a range of electrified performance vehicles, including an all-electric version of the upcoming MC20 hypercar.

Premium First
British premium manufacturer Jaguar Land Rover South Africa (JLR SA) did not want to announce any future product launches to Engineering News & Mining Weekly.

“We can, however, reveal that Jaguar will have undergone a renaissance to emerge as a pure-electric luxury brand from 2025,” says JLR SA product and pricing manager Janico Dannhauser.

“These will be dramatic and extremely desirable all-electric vehicles. We will not be aiming for the mass market or even the conventional premium segment.”

In the next five years, Land Rover will also welcome six pure electric variants through its three families of Range Rover, Discovery and Defender.

The first all-electric variant will arrive in 2024.

Already on the road in South Africa are PHEV powertrain options for the company’s new Jaguar F-Pace and E-Pace models. In addition, either PHEV or MHEV powertrain options are available across the entire Land Rover and Range Rover model line-ups.

“Predicting the future of the South African motor industry and how the [nature] of new car showrooms will evolve over the next decade are difficult tasks,” says Dannhauser.

“But, by watching what’s happening in the regions legislating ICE vehicle bans, we can get a pretty clear idea of what’s coming our way.

“Over the next five years, the EV population in our market will grow quickly in the premium segment,” adds Dannhauser.

“It’s here where brands can absorb more costly technologies. Equally, higher-income customers are naturally more willing to adopt new technologies earlier and experiment with alternative power sources in their cars.

“But, by the end of the decade, many of the barriers to EV entry will have toppled,” he notes.

“Battery and recharging technologies will have improved; more affordable offerings from a broader range of brands will be in the market; the private sector will have invested in domestic infrastructure development; and the resistance and scepticism we see now from the buying public will have eased.

“Electric propulsion will no longer be an out-of-reach fantasy; it will be consumers’ vehicles-of-choice, regardless of which tax bracket they live in.”

Volkswagen and Toyota?
The vehicle brands topping the sales lists in South Africa like clockwork are Germany’s Volkswagen and Japan’s Toyota.

How do these more affordable brands plan to tackle electromobility in South Africa going forward?

“We are currently investigating various EV options for the Volkswagen brand in South Africa. As a brand, we have not finalised our decision yet,” says Volkswagen South Africa Passenger Cars head Steffen Knapp.
The company does, however, have six e-Golfs on the road in South Africa as part of its Electric Mobility Pilot Project.

The vehicles –not for sale – are being tested by motoring and lifestyle media, selected dealers, as well as Volkswagen employees, in an effort to gain consumer insights into the varying experiences of driving and living with a BEV in South Africa.

Globally, Volkswagen is looking at how to make electromobility more affordable through its ID range, with the concept ID.LIFE small car having been unveiled earlier this year, for example.

Toyota South Africa (Toyota SA), similar to BMW, was a first mover in the country in terms of electromobility, with the introduction of the Prius hybrid on the local market in 2005.

At the time, it was the first new-energy vehicle (NEV) available in South Africa.

Today, Toyota’s premium brand, Lexus, has become the pioneering brand for hybrid technology in the country.

Lexus currently has an estimated 30% share in the local NEV market.

“This year, we saw Toyota SA playing a big role towards the introduction of NEVs with the launch of the Corolla sedan and RAV4 hybrids,” says the company.

“In November, Toyota will also be launching its first locally produced hybrid, the Corolla Cross, which will be available as a petrol-only variant.”

Toyota SA says it is looking to transition to a NEV mix of between 15% and 20% of local sales in the next five years, and up to between 30% and 40% over the next ten years.

“Due to their price, availability and self-charging capabilities (in other words, they are not dependent on charging infrastructure), [MHEVs] will form the core of our roll-out.”

Toyota SA adds, however, that it plans to add PHEV and BEV models to its model mix “where available and suitable”.

“We hope to have three to four PHEVs available in our local line-up over the next two years, with these likely to be midsized SUVs in the Toyota and Lexus portfolios.”

No Immediate Plans
The majority of vehicle brands in South Africa have no immediate programmes to bring a BEV or PHEV to the local market in 2022 and 2023.

Suzuki, one of the top-five vehicle sellers in the local market, says it has no plans to introduce such a vehicle in the near future.

The same is true for Mazda, Renault, Ford and Hyundai.

Globally, Mazda, Ford and Hyundai have, however, announced major investments in BEVs and/or hydrogen vehicles, with Ford, for example, hoping that about half of the cars it sells by 2030 will be zero-emission.

Still Evaluating . . .
Kia South Africa says it is continuously evaluating the suitability of introducing BEVs, PHEVs and MHEVs on the South African market in line with its new brand strategy – movement that inspires – and a related focus on advanced technologies.

“However, from a pricing perspective, it’s important that these vehicles are priced in line with market and customer expectations. To make that a reality, there is a need now, more than ever, for a level of subsidy by government.
“That said, we plan to bring in new technology into the country for extensive evaluation to ensure that Kia will be at the forefront when the mainstream automotive market in South Africa adopts the wide-scale introduction of EV tech.”

Mahindra says it is a pioneer of EV technology in India, with a range of zero- emission vehicles on offer, ranging from two-wheelers, three-wheelers, passenger vehicles and SUVs to, ultimately, the electric Battista hypercar from its affiliate, Pininfarina.

“Among the many vehicles available to Mahindra is the all-new XUV300 Electric, which will be launched in India in the near future,” says Mahindra South Africa CEO Rajesh Gupta.

“Mahindra South Africa is studying the market potential for EVs in South Africa. It is also participating in industry groups through its affiliation with Naamsa | The Automotive Business Council to lobby policymakers to create the necessary policies that will allow for the cost-effective introduction of these vehicles.”

It is not entirely clear what Nissan, the one-time leader in BEVs in South Africa, is planning for the future.

“As this technology becomes more accessible, and more and more charging stations around the country are produced, we’re confident the uptake of EVs will increase,” says the local arm of the Japanese company.

“We intend to launch some new, first-to-market technology in 2022 within our product stable.”

Yet another Japanese car maker, Honda, will, by 2040, have no other choice but to sell BEVs and fuel-cell vehicles in South Africa, as the company CEO has announced that Honda will exclusively sell battery-electric and hydrogen fuel-cell vehicles by 2040.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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