10 March 2023: As the world moves towards sustainable and eco-friendly modes of transportation, electric vehicles (EVs) have emerged as a promising solution to combat climate change.
In Africa, South Africa has emerged as a leader in the EV market, with local EV sales increasing by 132% to 502 units sold in 2022, a significant increase from the previous year’s figures. This is compared to our counterpart, Kenya, where there are only a total of approximately 350 EVs on Kenyan roads of the country’s 2.2 million registered automobiles. Yet despite South Africa having the most advanced e-mobility market in Africa, EVs still represent less than 1% of new car sales.
“The country’s automotive industry needs to accelerate its plans for transitioning to EVs if it hopes to remain competitive in the global market. The transition to EVs presents an opportunity for the automotive industry to reinvent itself, but failure to act swiftly could result in the country being left behind,” notes Mpho Dipela, Chairman and shareholder of Legacy Motor Group (LMG).
“However, as the world transitions towards phasing out internal combustion engine (ICE) cars, Kenya is ahead of many African peers. Their country is leading the way in the transition to e-mobility, making notable investments in electric buses, taxi cabs, motorcycles, and charging stations – and setting the example for the continent,” he says.
Kenya is one of only a few countries in sub-Saharan Africa that has set a target for the electrification of its transport sector, and is ahead of most of its continental peers in the race to phase out ICE cars and replace them with electric vehicles. Notably, it aims to achieve at least a 5% electric vehicle share of all new vehicle registrations by 2025, and 30% by 2030.
“By following Kenya’s example and adopting similar policies, South Africa could help to pave the way for electrification of the transport sector in sub-Saharan Africa and lead the charge towards a cleaner and more sustainable future for its citizens. Their example proves the ways in which we are falling behind owing to a lack of supportive policies, policy uncertainty, and other obstacles,” adds Dipela.
For example, the Kenyan National Treasury has reduced the excise duty on fully electric cars to 10%, making them more attractive to buyers. By contrast, EVs in South Africa currently face import tariffs of 25% compared to the 18% paid on traditional ICE vehicles.
Likewise, the country’s power utility, Kenya Power, has installed additional generation capacity of 3,321 megawatts (MW) against peak demand needs of 2,132 MW to support the EV
transition. By contrast, South Africa’s infamous energy crisis and power generation capacity remains a major stumbling block.
“Kenya has set the example for acting swiftly to implement the necessary policies to support the EV transition. For years, we have had all the right intentions, but we also need more detail and action on the promised policy direction, demand stimulus interventions and public education, or risk being left behind.”
Accelerating the roll-out of EVs
Local government has already taken some steps to support the transition to EVs, including offering tax incentives for companies that invest in EV manufacturing and reducing
import duties on EV components. However, more needs to be done to create a supportive policy environment that will encourage investment in the local EV industry, says Dipela.
“South Africa has the potential to boost the adoption of EVs by taking cues from Kenya’s policy on taxes. Given their high cost, government needs to create greater incentives for consumers to buy EVs, such as tax rebates, lower import duties and manufacturing incentives, to help drive demand and support the development of a local EV industry. This is especially as the country continues to grapple with loadshedding and energy concerns.”
Currently there are over 300 public charging stations in South Africa, and by investing in a more robust charging network, the country can also cater to the growing demand for electric vehicles and address range anxiety concerns among potential buyers.
“This will require a coordinated effort between government, industry and labour, as well as investment in infrastructure and supportive policies. If South Africa can get this right, it has the potential to become a significant player in the global EV market and create new jobs and economic growth.”
The industry itself has also been taking steps to prepare for the transition to EVs, with some local manufacturers already producing EVs and others investing in research as well as development. But that the pace of this transition needs to be accelerated if South Africa is to keep up with the rest of the world.
“South Africa’s vision of a globally competitive and transformed industry that actively contributes to sustainable development and prosperity for industry stakeholders as well as society at large hinges on the adoption of EVs,” adds Edward Makwana, LMG General Manager of Public Relations, Marketing and Customer Experience.
While the Department of Trade, Industry, and Competition (DTIC) released a green paper on New Energy Vehicles in May 2021 and promised a White Paper by October of the same year, the delay in publishing the White Paper is a cause for concern.
“South Africa needs to accelerate the publication of this paper and move forward with the necessary policy changes and investments to support the adoption of EVs. As an automotive retail group, we need certainty that our future business model will be sustainable. We are encouraged by NAAMSA – the automotive business council’s persistence of putting pressure on government and already looking at alternatives of moving forward with or without the support of government.”
ENDS/