SA sees jump in EV sales as locals become ‘smarter’

Electric vehicle sales in South Africa have seen an increase in the first quarter of 2023.

This is according to the National Association of Automobile Manufacturers of South Africa (Naamsa) in a new report.

The industry body notes that new energy vehicle (NEV) sales by 14 industry brands in the country increased by 18.8%, from 1 401 units in the first quarter of 2022, to 1 665 units in the first quarter of 2023.

A NEV is a type of vehicle that utilises alternative energy sources instead of relying solely on traditional fossil fuels.

NEVs are designed to be more environmentally-friendly and energy-efficient, aiming to reduce greenhouse gas emissions and dependence on non-renewable resources. It usually incorporates an electric powertrain, which consists of an electric motor, battery pack and associated control systems.

According to Naamsa, overall, NEV sales reflected a significant year-on-year increase of 421.7%, from 896 units in 2021, to 4 674 units in 2022, comprising 0.88% of total new vehicle sales.

It notes the Department of Trade, Industry and Competition published a green paper on the advancement of new energy vehicles in SA in May 2021. This document highlighted that the NEV challenge in SA was two-dimensional, encompassing both demand and supply side considerations.

It concluded it was an inevitable transition for the South African automotive industry in the global race to transition from the internal combustion engine (ICE) era, into electro-mobility solutions and technologies.

In its NEV thought leadership paper to support and strengthen the country’s long-term strategy on NEVs, released in February 2023, Naamsa concluded consumers are becoming smarter and technologically more educated, and are demanding newer technology vehicles at a modest price.

However, the association points out that despite lower running costs, the high upfront purchasing cost of NEVs (linked to higher production costs, mainly related to battery production) has been the main inhibitor to increased NEV uptake in SA.

It explains this is exacerbated by the effects of the value-added tax; the ad valorem excise duty based on a sliding scale up to 30%, and the import tariff; limited product availability; and awareness issues emanating from range anxiety, security of electricity supply and a limited understanding of the technology.

“Driving a meaningful NEV transition in SA will require a careful balance between incentivising a sustained shift in domestic market demand to NEVs; establishing an appropriately aligned, renewable energy-based charging infrastructure; and supporting a shift in South African vehicle production, away from ICE vehicles to a mix of hybrid electric vehicles, plug-in hybrid electric vehicles and battery electric vehicles,” says Naamsa in the report.

In April, deputy minister of trade, industry and competition Nomalungelo Gina said government is committed to finalising, with speed, the development of SA’s electric vehicle policy, working with all critical industry players.

Gina said the transition away from ICE vehicles to electric vehicles (EVs) calls for all original equipment manufacturers to work with government.

“Our approach of working with industry associations like the National Association of Automobile Manufacturers of SA on this policy framework will continue to the end. We all feel the pressure to move with speed so that we are not overtaken by other markets still at their foundation phase, like us.

“We all agree that the maturity of our South African automotive sector locates it at a vantage point to be part of the leaders in EVs, including component manufacturers. We therefore appeal for partnership and cooperation, as we increase our speed to finalise strategic policy areas,” she said.

Meanwhile, according to the International Energy Agency (IEA), the global auto industry is undergoing a sea change, with implications for the energy sector, as electrification is set to avoid the need for five million barrels of oil a day by 2030.

It adds that global sales of electric cars are predicted to surge to yet another record this year, expanding their share of the overall car market to close to one-fifth, and leading a major transformation of the auto industry that has implications for the energy sector, especially oil.

The new edition of the IEA’s annual Global Electric Vehicle Outlook shows more than 10 million electric cars were sold worldwide in 2022, and that sales are expected to grow by another 35% this year to reach 14 million.

This means electric cars’ share of the overall car market has risen from around 4% in 2020, to 14% in 2022, and will increase further to 18% this year, based on the latest IEA projections.

“Electric vehicles are one of the driving forces in the new global energy economy that is rapidly emerging – and they are bringing about a historic transformation of the car manufacturing industry worldwide,” says IEA executive director Fatih Birol.

“The trends we are witnessing have significant implications for global oil demand. The internal combustion engine has gone unrivalled for over a century, but electric vehicles are changing the status quo. Cars are just the first wave – electric buses and trucks will follow soon.”