The uptake of electric vehicles (EVs) has taken centre stage as the most viable means to reduce greenhouse gas emissions around the world. In South Africa, the race to shrink the transport industry’s carbon footprint is no different. However, the local automotive ecosystem’s sluggish transition to low-emission alternatives means its sizable contribution to GDP hangs in the balance, says GoMetro CEO, Justin Coetzee. His view is that commercial players and government bodies can both do more to safeguard the industry.
In 2023, 75.5% of vehicles produced in SA were exported to the UK and EU, according to the Automotive Business Council. However, these markets have committed to ban the sale of new fossil-fuelled vehicles by 2035. This resolve is strengthened by the new UK Labour government that is expected to honour the commitments made in the Paris Agreement.
An estimated 67% of the SA’s automotive component exports are also at risk due to a predicted decline in demand, as noted in a Department of Trade, Industry and Competition (dtic) EV White Paper.
“The transport industry is South Africa’s third largest source of emissions, representing almost 11% of the country’s aggregate. The only way to reduce emissions in this sector is to move away from internal combustion engine (ICE) vehicles to EVs, and some say also hydrogen vehicles (HV). The HV dream is not something we believe is feasible, but EVs are another matter,” says Coetzee.
The Government’s Green Transport Strategy set out its commitment to a 5% reduction in transport emissions by 2050. The caveat is that large financial investments in new production lines and equipment are needed to transition the local automotive manufacturing industry to produce EVs.
A regulatory framework that encourages local EV production is slowly unfolding. The recent announcement of tax breaks (from 2026) for the new production of EVs and HVs, is one such example, but the market is simply not ready, Coetzee notes.
“Vehicle manufactures are heavily invested in the production of ICE vehicles, with loans that could take 10 or 20 years to pay off. These manufacturers are not in an ideal position to invest in EV production facilities. Because of this stalemate, EV development in South Africa could come to a halt.”
Clearing the policy roadblock
Government’s goals for the implementation of EV manufacturing are not supported by the policies that are currently in place, in particular the high costs of importing EVs, due to unreasonable tariffs and duties.
“Government should aim to strike a balance between the preservation of export revenue and jobs and spurring the uptake of EVs in South Africa. Additional incentives could, for example, allow EV startups to pilot and test technologies and scenarios without the penalty of high import duties,” Coetzee explains.
“Additional policies that stimulate local manufacturing initiatives would, in turn, accelerate greater corporate and consumer interest by narrowing the price differential between EVs and ICE vehicles,” he adds.
A framework for compliance
South Africa does not have a set of specifications for EV “homologation”, the process that checks if all new vehicles coming into the country comply with local standards. Instead, EV compliance is based on the existing standards for ICE vehicles. Engine capacity, for example, does not automatically apply to a vehicle with an electric drivetrain. This leaves a policy vacuum for regulatory bodies to define a set of compliance standards that incorporate EVs.
Licensing for charging facilities is also still an open-ended debate, with scope for further regulatory clarification. “Selling energy might become a complex issue down the line, and a coordinated effort between key government players alongside Eskom needs to come to the fore. This will ensure industry actors have certainty to make investments,” says Coetzee.
He adds that the Government has also not yet defined guidelines for the disposal of EV batteries, which have a useful life of seven to 10 years in commercial settings. EVs therefore do not depreciate in the same linear ways as ICE vehicles and can’t be written off in the same financial time frames.
“Regulations should define both penalties for stalling fleet transition and incentives for decommissioning or recycling components, as well as whose problem this becomes – vehicle owners, auto dealers or manufacturers,” he says.
When to ‘rEV’ up your fleet
There are great opportunities for businesses, though, Coetzee says: “Companies can use data collected from their current fleet to provide specific recommendations around best use-cases for EVs. This can also prevent any risk of overcapitalising on unnecessary private charging stations.
“There are many financial and operational reasons to continue using older technology in certain cases. Diesel for long-haul trucks, for example, might make sense for the next 10 to 15 years. Companies can, however, identify lower hanging fruit – such as delivery vans or service vehicles – for EV implementation based on where it will work best and how it is being used,” Coetzee notes.
“EVs are the future of transport. But that doesn’t mean that every situation can be supported by these vehicles. By implementing EVs correctly, companies can save significantly on operating costs, reduce emissions and take advantage of the technology we have available today,” he concludes.
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