Mercedes-Benz South Africa (MBSA) aims for electric vehicles (EVs) to be 50% of its sales in the domestic market by 2026, says Mercedes-Benz Cars co-CEO and MBSA executive director Mark Raine.

He acknowledges this to be a rather bullish sentiment in a market that sold a total of 218 EVs in 2021, but believes it is indeed possible.

“I think the South African market is ideally suited for the premium segment to become electric,” Raine tells Engineering News Online.

“Yes, Eskom may have continued difficulty in meeting electricity demand, but premium car clients are either already off the grid, or they are thinking about it.”

These buyers also typically have households with two to three cars, which means they are not reliant on only one vehicle, and can ‘risk’ buying an EV.

In addition to this, premium segment buyers are often first movers when new technology becomes available.

“Also, from an economic point of view, it makes sense to go electric,” says Raine.

“If you are travelling between Pretoria and Johannesburg, for example, you can save between R4 000 to R6 000 a month on fuel costs.”

Raine says rapidly rising fuel prices are playing into the EV sector’s hands.

“Yes, our customers may be top earners, but even for them numbers like these make the decision to get into an EV much easier.”

The EQ Range
MBSA unveiled the EQ EV brand in South Africa in January.

The local arm of the Germany luxury car maker initially said it would launch the EQ range in the second quarter of the year. However, this date was pushed to the third quarter owing to the war in the Ukraine and its effect on EV availability in particular.

This means the EQ range will now make its debut at the Festival of Motoring in Gauteng in August.

“Up to now we have not released any EQ vehicles to local customers,” says Raine.

August will see the introduction of the EQA, EQB, EQC and EQS models, with the EQE to be launched towards the end of the year.

The last letter of each model’s nomenclature reflects its ‘match’ in Mercedes-Benz’s internal combustion engine (ICE) catalogue – EQA resembles the GLA, and so forth.

“We want to launch the EQ vehicles all together in order for customers to come to showrooms and see the difference in the various vehicles,” explains Raine.

“We want to give them the opportunity to make an educated choice on the vehicle best suited to their needs.”

Next year will see the introduction of some sports-utility vehicle versions of the vehicles launched this year.

By the end of 2023, MBSA should have seven EQ models available in South Africa, says Raine.

The EQA will offer MBSA’s entry into the EQ range, with pricing to start at just over R1.1-million.

That 25% Import Duty . . .
“There are three things we need to get right as a brand and as a country when it comes to EVs,” says Raine.

The first is to tackle the price disparity that exists through the different import duties levied on ICE vehicles and EVs, followed by the need for sufficient charging infrastructure countrywide.

It is also a necessity that South Africa takes a holistic view of the EV ecosystem, with a focus on having all the supporting infrastructure and people in place, such as training first responders on how to deal with EVs on accident scenes.

Price parity is a key determining factor in making EVs successful in South Africa, notes Raine.

EVs are currently subject to a 25% import duty, and ICE vehicles to a 18% duty.

“For me, looking at it from a global perspective and looking at the local market, it makes no sense to put EVs at a disadvantage,” says Raine.

“I don’t support EV subsidies in South Africa, considering the economic and political conditions in the country. This also doesn’t make sense as EVs are currently coming in in the premium segment.

“But, putting EVs at a disadvantage puts South African consumers, the South African market, and South Africa as a country on the backfoot versus the global market.

“We need price parity. We need like-for-like.”

Government is still to release its new-energy vehicle strategy.

“Going slow has its advantages as you can see and learn how other markets have proceeded, and then choose the right strategy, but we really do need some momentum now,” says Raine.

“We really need to drive this forward. From a manufacturer point of view this is a necessity. The market is moving that way, whether anyone wants it to or not.

“If we want products on par with the best global standards, then we need to go electric.”

Raine does not believe that Eskom’s woes will be able to hold back the move to EVs in South Africa.

“There will be a strong transition to renewables if you look at what is happening.”

MBSA produces the C-Class at its East London plant for the local and export markets.

The Premium Market
The new-vehicle market in South Africa has delivered a few unexpected twists and turns this year, says Raine.

The war in Ukraine has ensured that vehicle supply has remained a challenge “for us and everyone”, he notes.

The floods in KwaZulu-Natal in April, which still haven’t seen market leader Toyota South Africa Motors – at almost 25% of the market – return to production, have also changed the sales dynamics “in ways no-one could have foreseen”.

Instead of the used-car market cooling down, residual values have remained high, says Raine.

“I expected it to dip in the third quarter, but it’s not happening. Used-car prices are up.”

This is also the case for premium used vehicles.

Low consumer and business confidence are also making people think twice about buying a new vehicle.

This said, Raine believes the 2022 domestic premium market should show some growth over 2021 numbers.

“We had two very bad years previously, so it is only natural for the market to go up, as there is significant pent-up demand.

“We have some big order books and we are filling them.

“The critical question, however, is what will happen in 2023. Is this momentum sustainable? Will there be economic recovery? How will Eskom and politics influence the market?” asks Raine.

“I personally think the mass and premium markets will be affected equally by these factors.”