Delayed Joule project seeks R9bn to produce market-ready vehicle

6th July 2011 By: Irma Venter - Creamer Media Senior Deputy Editor

Optimal Energy is seeking around R9-billion to commercialise its home-grown Joule electric vehicle (EV). This includes developing the final product, and securing a local production facility, says CEO Kobus Meiring.

“We are getting there – slowly, but surely,” he notes.

Meiring says it was vital for the Joule project to remain on government’s books, so to speak, when its industrial policy action plan was fine-tuned recently.

“South Africa’s electric vehicle was written into the document again, which is good, as we would not be able to do what we are doing without government support.”

Meiring is optimistic about securing the R9-billion required for the Joule to roll off the production line, for both the local and export markets.

More than R3-billion of this could come from government in some form or the other.

Meiring says an agreement with the East London industrial development zone (ELIDZ) to give Optimal Energy the land required for a production plant in return for signing a long-term lease, will cut the R3-billion government contribution by about R1-billion.

Optimal Energy could form part of the multi-vehicle assembly plant proposed for ELIDZ, he adds.

“We are busy with a feasibility study to determine the viability of doing this.”

The Automotive Investment Scheme (AIS) could serve as another funding mechanism, adds Meiring.

Government’s AIS provides vehicle makers with a taxable cash grant of up to 30% of their investment, should they meet a number of requirements, including achieving production of 50 000 units a year within a ramp-up period of three years.

“It depends to what degree we localise the vehicle’s content, but we expect we could end up at around 25%, which is around R1.3-billion,” says Meiring.

“Then there is also the possibility of some other budget items of around R1-billion,” he adds, not elaborating.

Another R3-billion of the R9-billion required could flow from export credit agencies.

“For the remaining R3-billion we are talking to a number of potential partners. Their investment could be an in-kind contribution. It could be an equity stake in the business,” says Meiring.

He says this means “not all costs will be carried by the South African taxpayer”.

He does not want to name any of the companies with which Optimal Energy is negotiating.

“We are talking to a number of potential partners who can all bring different things to the table.”

As for the Joule itself, Meiring says the aspirant car maker has produced four working prototypes, which he describes as “customer-ready in terms of look and feel”.

These have been hand-built, and do not resemble the final product, he points out.

Meiring says Optimal Energy was working towards the first Joule rolling off the production line in the second half of 2015. However, failure to secure financing “may push this out”.

The production volume currently targeted is 50 000 cars a year, but this could go to 75 000 units.

The former Rooivalk programme manager is positive the Joule “remains a good idea”.

He believes zero-fuel, zero-emission EVs will form a substantial part of the automotive industry’s not-too-distant future.

However, Meiring notes that government has indeed become increasingly risk-averse.

He says the Joule project is often compared with government’s failed pebble-bed modular nuclear reactor development programme – a comparison he regards as “unfair”.

“They never reached the prototype stage.”

Meiring says the Joule represents South Africa’s “most viable opportunity” to enter the global automotive market with its own product.

“Sometimes it is frustrating that we can’t do this sooner.”

When first announced in 2008, Optimal Energy said it hoped to produce its first Joule in 2010.