South Africans pay more for their electric vehicles (EVs) than the rest of the world, mainly because most countries have incentive structures that are not offered by the South African government.
That’s one of the key findings of the recently released AutoTrader Mid-Year Industry Report 2022, which analyzes car buying patterns and car buyer preferences on SA’s largest automotive marketplace for car buyers and sellers.
According to the report, which covers the period from January to June 2022, despite ongoing power supply issues, high prices and concerns about range concerns, interest in the electric vehicle market among South Africans is growing by 134% year-on-year . increasing the number of EV searches on the site.
It is noted that in 2022, the BMW i3 is the most requested electric car, followed by the Audi RS e-tron GT and the Audi e-tron. Despite being the cheapest electric car on the list, the MINI Cooper Hatch SE was the sixth most requested car, the report said.
While there is demand for electric cars from South African customers, high prices are the biggest barrier to wider adoption, with SA among the countries with the highest prices for electric cars, the report shows.
Among the favorable factors are electric car import tariffs, which currently stand at 25% – much higher than the 18% import tariffs for combustion engine cars, according to AutoTrader.
“In South Africa, we seem to be struggling with tax credits on new cars. Import duties, etc. have a big impact on how much we end up paying for electric cars – another reason to make them in South Africa,” says George Meaney, CEO of Autotrader.
“We’re in this weird situation where we’re paying more for our electric cars than the rest of the world, just because they have an incentive structure that we don’t have. Countries that have tax breaks are becoming very incentivized markets for electric vehicles, one of the best examples being Norway.”
SA is seeing slow but steady growth in adoption compared to the rest of the globe, reaching a total of 1,559 EV units sold as of early 2022.
Governments around the world are increasingly introducing policies or strengthening existing policies to ensure the uptake of electric vehicle purchases in an effort to reduce carbon emissions.
Norway is the world’s largest market for electric vehicles. The country has long been considered a leader in the race to introduce electric vehicles, with battery electric vehicles accounting for more than 40% of the market share, largely due to numerous incentives and tax breaks for electric vehicle owners.
In Australia, the Victorian government has unveiled a $100 million stimulus package to encourage its citizens to invest in electric vehicles.
The UK government has decided that by 2032, 60% of all cars and small vans should be electric, and by 2035 they should be completely carbon-free.
While South Africa leads other African countries in the adoption of electric vehicles, compared to other emerging markets such as India and Mexico, the country lags behind.
“In addition to the import duties that South African car buyers have to pay, other taxes are added to the car purchase price; i.e. 15% VAT and 40% ad valorem tax. All in all, that’s a lot of money for the average South African. Moreover, these sums consist of the entire ecosystem from charging technology and infrastructure, installation fees, battery technology, training, etc., says Mini.
The National Association of Automobile Manufacturers of South Africa has been calling on the government for years to create an enabling environment for the importation and local production of electric vehicles, which is a major development for the automotive industry.
Other issues hindering the country’s progress in the electric vehicle market include an unsupportive regulatory framework, lack of recycling of electric vehicle batteries and a lack of public charging stations across the country.
“While we think about promoting demand for electric vehicles in SA, we also need to think about the production of electric vehicles. Ancillary opportunities that exist around battery cells, cell technologies and all those cells/products that are driven by the growing demand for electric vehicles. This means that we will not rely on external companies to build manufacturing facilities in South Africa,” notes AutoTrader.
Last year, President Cyril Ramaphosa announced that the government was paving the way for local production of electric vehicles under the new Automotive Development Program (APDP), which began in July.
Ramaphosa highlighted the important contribution local production of electric vehicles would make to South Africa’s economy while encouraging wider adoption.
He noted that by introducing new policies such as APDP, the government aims to support the local electric vehicle market. He is pushing to ensure SA develops manufacturing capacity in what is expected to be a growing part of the local car market.
According to AutoTrader, South Africa’s EV charging infrastructure is growing steadily, with charging points spaced 100 to 200 km apart along major highways.
“In the world, as a rule, there is one charger for every 20 electric cars. In SA we now have one charger for every four electric vehicles, which shows that as a nation we are ahead of the chicken and egg curve.
“So we must not take our foot off the EV pedal, because at some point car sales will be faster than the rollout of charging infrastructure in SA,” Mini argues.