Government’s incentive scheme for the local automotive industry, the Automotive Production and Development Programme (APDP), implemented in 2013 and ending in 2020, has no direct incentive for the production of alternative drivetrain technologies, such as battery electric vehicles (BEVs), says the newly released State of Electric Vehicles (EVs) in South Africa report, published by the uYilo Electric Mobility (eMobility) Programme. 

Vehicle manufacturing plants within South Africa include BMW, Ford, Mercedes-Benz, Nissan, Isuzu, Toyota and Volkswagen, all centred around traditional petrol and diesel powertrain technologies.

In 2016, Mercedes Benz South Africa was the first local vehicle manufacturer to advance into alternative technologies with the manufacturing of the C-Class plug-in hybrid electric vehicle (PHEV) at its East London plant. 

Not much progress has been made beyond this first step in alternative drive-train production.

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

“With many cities and countries worldwide announcing plans for the banning of petrol/diesel vehicles, we need to review the market longevity of the vehicles manufactured locally,” says uYilo eMobility Programme director Hiten Parmar.

“As 60% of vehicles manufactured in South Africa are exported to the European Union (EU) – and with many of these countries implementing a ban on fossil fuel from as soon as 2025 – will other African States become the future ‘dumping ground’ for South African-built petrol/diesel vehicles?”

However, it is possible that other African countries will act proactively in joining the global climate action movement, leapfrogging to EVs, he notes.

A revised APDP will serve the local automotive industry from 2021 through to 2035, based on the South African Automotive Masterplan (SAAM).

This programme includes targets of achieving 1% of global vehicle production by 2035, while increasing local content from the existing 39% to 60%, as well as doubling employment in the value chain. 

SAAM states that energy efficient vehicles (EEV) will comprise 35% of the global market by 2040, with EVs dominating this basket of EEVs. 

However, there is only a passing reference to a “EEV Technology Road Map”, with no direct technology incentive outlined for South Africa to capture global EV market share, says Parmar.

IMPORT DUTIES
As South Africa does not manufacture BEVs locally, importers must source these vehicles from international markets, notes Parmar.

The first HEV introduced in South Africa was the Toyota Prius in 2005, the first BEV was the Nissan Leaf in 2013, and the first plug-in hybrid electric vehicle (PHEV) was the BMW i8 in 2015. 

To date, there are no fuel-cell electric vehicles (FCEV) sold locally.

The BEVs sold up to the end of 2019 include the Nissan Leaf (94 units), BMW i3 (405 units) and Jaguar iPace (46 units), to reach a total of 545 units. 

Price parity for BEVs with their petrol and diesel counterparts is forecast to occur by 2023, as manufacturers accelerate production output to meet consumer demand, says Parmar.

This will lower the price of EVs, increasing access to these type of vehicles, which remains rather pricey.

As South Africa is reliant on internationally sourced EVs, current low local sales may also be a reflection of current tariffs within the automotive policy regime, adding to the price of EVs.

The EU is South Africa’s largest trading partner and the SA-EU Economic Partnership Agreement governs trade relations and development cooperation on bilateral trade in the current framework until October 2022. 

Under the current tariff structure, petrol/diesel passenger vehicles manufactured in the EU and imported into South Africa attract 18% customs duty, whereas EVs attract 25%. 

This is an immediate, additional 7% pricing barrier on the sale of EVs in South Africa, says Parmar.

Additionally, structured within the recommended retail price of the vehicle, are ad valorem customs and excise duties calculated against the customs value of the vehicle, as well as the addition of value-added tax. 

In markets outside the EU, the customs duty of 25% is applicable across all types of vehicles ­– petrol/diesel/electric.

GOVERNMENT POLICY
As a signatory to the Paris Agreement under the United Nations Framework for Climate Change Convention adopted in December 2015, South Africa is committed to ‘peak, plateau and decline’ its emission trajectory through its ‘nationally determined contributions’. 

The National Climate Change Response Strategy is a supporting policy document guiding climate change response across all departments. While some policy instruments have been implemented, the respective revenue accrued within the fiscus through these instruments is not applied to corresponding climate change actions, says Parmar.

Some of the policy instruments relating to addressing transport emissions include an environmental carbon levy to penalise the buyers of vehicles with high carbon dioxide emissions; a fuel levy, which raises the cost of petrol and diesel to promote greener alternatives; and a carbon tax, which gives effect to the polluter-pays-principle for large emitters.

However, broader policy frameworks need to be aligned towards addressing global climate action, says Parmar.

Climate Action Tracker, an independent scientific analysis that tracks government climate actions and measures them against the globally agreed Paris Agreement lists, deems South Africa’s actions as ‘highly insufficient’, and not consistent to holding climate warming to below 2 °C above pre-industrial levels, let alone the Paris Agreement’s 1.5 °C limit, says Parmar.

“South Africa is lagging behind worldwide efforts to accelerate the launch of EVs into all markets, both from the standpoint of local manufacturing competitiveness and a local car parc that will address the country’s poor air quality.

“The required accelerated efforts need to be collaborative with government, industry and the country’s citizens.”