South Africans pay more for their electric vehicles (EVs) than the rest of the world –mainly because most countries have incentive structures which are not offered by the South African government.
This is one of the key findings of the newly-released 2022 AutoTrader Mid-Year Industry Report, which analyses vehicle shoppers’ buying patterns and vehicle preferences on SA’s largest motoring marketplace for car buyers and sellers.
According to the report, which covers the period January to June 2022, despite continued power issues, high prices and concerns about range anxiety, there has been a growing interest in the EV market among South Africans – with a 134% year-on-year increase in EV searches on the site.
The most enquired about EV in 2022 is the BMW i3, followed closely by the Audi RS e-tron GT and Audi e-tron, it notes. Despite being the cheapest EV on the list, the MINI Cooper Hatch SE was sixth on the list of the most enquired about vehicles, it notes.
Although there is demand for EVs from South African customers, the high prices are the biggest hurdle to increased adoption, with SA ranking among the countries with the highest prices for EVs, the report reveals.
Among the contributing factors is the EV import tariffs, which are currently at 25% − much higher than the 18% import tariffs for combustion engine vehicles, says AutoTrader.
“In South Africa, we seem to be battling with tax incentives on new cars. The import duties, etc, massively impact on how much we ultimately pay for electric cars – all the more reason to manufacture them in South Africa,” says George Mienie, Autotrader CEO.
“We’re in this odd situation where we actually pay more for our electric cars than the rest of the world, only because they have an incentive structure which we don’t. The countries that have tax incentives in place become very stimulated EV markets, with one of the best examples being Norway.”
SA is seeing slow but steady growth of adoption compared to the rest of the globe, reaching a total of 1 559 EV units sold at the beginning of 2022.
Let’s go local
Governments across the globe have been increasingly introducing policies or strengthening existing policies to ensure an uptake in EV purchases, in efforts to reduce carbon emissions.
Norway is the world’s biggest EV market. The country has long been hailed as a leader in the race to adopt electric cars, with battery electric vehicles at over 40% of market share, largely attributed to the many incentives and tax benefits for EV owners.
In Australia, the Victoria government has introduced a $100 million incentive package to encourage its citizens to invest in EVs.
The UK government has stipulated that 60% of all cars and small vans need to be EVs by 2032 and completely carbon-free by 2035.
While SA is leading other African countries in EV adoption, in comparison to other emerging markets like India and Mexico, the country is falling behind.
“Besides the import duties that South African car buyers have to pay, there are other taxes added to the purchase price of the vehicle; ie, 15% VAT and a 40% Ad Valorem tax. Added up, this is a lot of money for the average person in South Africa. More so, these amounts are made up of the entire ecosystem from the technology and charging infrastructure, installation fees, battery technology, training, etc,” asserts Mienie.
The National Association of Automobile Manufacturers of SA has for years been urging government to create a favourable environment for the importation and local production of EVs, as an important development for the automotive industry.
Other challenges hindering the country from progressing in the EV market include unsupportive regulatory frameworks, the lack of EV battery recycling and insufficient public charging stations across the country.
“While we’re thinking of driving the demand for electric cars in SA forward, we also need to think about electric car manufacturing. The subsidiary opportunities that exist around battery cells, cell technology and all those elements/products that are driven by the growing demand for the electric car. This means we will not rely on external companies to come and build manufacturing plants in SA,” notes AutoTrader.
Last year, president Cyril Ramaphosa announced government is paving the way for the local production of EVs, as part of the new Automotive Production Development Programme (APDP), which came into operation in July.
Ramaphosa highlighted the important contribution the local production of EVs will make to SA’s economy, while encouraging increased adoption.
He pointed out that through the introduction of new policies, such as APDP, government is committed to supporting the local EV market. It is making inroads to ensure SA develops production capacity in what is anticipated to be a growing part of the local automotive market.
According to AutoTrader, the EV charging point infrastructure in SA is growing steadily, with charging points between 100km to 200km of each other along major highways.
“Internationally, there is typically one charger for every 20 electric cars. In SA, we currently have one charger for every four electric cars − showing we are ahead of the chicken-and-egg curve as a nation.
“We therefore shouldn’t take our foot off the ‘electric car pedal’ because vehicle sales will happen faster than the deployment of charging infrastructure in SA at some point,” states Mienie.
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