Energy Capital & Power

How Close is South Africa to an EV Future?

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With the clean energy transition underway, electric vehicles (EVs) have emerged as a viable alternative method of transportation, responsible for considerably lower emissions over their lifetime than traditional vehicles. As South Africa looks to curb its emissions and offset coal-intensive electricity generation, EVs offer the ability to decarbonize the country’s domestic transportation sector, but have yet been unable to attain the high degree of traction witnessed in other foreign markets.

While the country’s first battery electric vehicle (BEV) – the Nissan Leaf – entered the domestic market in 2013, sales of electric vehicles, including BEVs, plug-in hybrid vehicles (PHEVs) and mild hybrid-electric vehicles (MHEVs) have been slow to take off. According to the uYilo eMobility Program – a multi-stakeholder, collaborative program that aims to foster and facilitate e-mobility in South Africa – only 710 BEVs, 690 PHEVs and 5,116 MHEVs have been sold in the country from 2013 to mid-2021. In comparison, the BEV market in Europe increased by 147% year-on-year in the first six months of 2021 alone, with a total of 336,000 units sold, while the PHEV market grew by 248%, with a total of 350,000 units sold.

With mounting pressure to reduce carbon emissions and phase out internal combustion engines (ICEs), an array of premium BEVs are slated to enter the South African market by 2023. On the consumer side, the primary opportunity for EVs in the country exists in the premium market. Twenty BEVs will be introduced to South Africa by 2023, a significant increase from the four models currently available to consumers – BMW i3, Jaguar I-Pace, Mini Cooper SE and Porsche Taycan. German automotive manufacturer Audi is one of the key competitors set to enter the market via the launch of its all-electric e-tron model range in Q1 2022, comprising six different e-tron derivatives across three different categories, and more than doubling the existing range of BEVS currently available in South Africa.

On the production side, South Africa could serve as a strategic manufacturer and exporter of EVs to Europe, the Americas and the wider African continent, with global sales having increased by 160%. Last October, Toyota launched its Corolla Cross hybrid vehicle range at its plant in Durban, representing the first locally produced hybrid vehicle in South Africa. The Cross will be exported to over 40 African countries and is expected to contribute over one billion dollars to the national economy. South Africa’s President H.E. Cyril Ramaphosa has made clear his intentions of fast-tracking local EV production, along with the transition to a hydrogen economy, as part of the country’s climate action and mitigation plan.

In spite of these opportunities, several key constraints have limited both the widespread adoption and local production of EVs in South Africa to date. Firstly, EVs are still heavily taxed owing to outdated legislation, carrying a 25% import tax compared to the 18% import duty against ICE vehicles. However, as the Ramaphosa Administration prioritizes electric vehicle production and adoption, it is expected that new import tariffs, sales incentives and/or federal tax credits will be implemented to make EVs more attractive to consumers and manufacturers alike. Secondly, South Africa’s state-owned power utility Eskom has long-faced intermittent power supply and rolling blackouts, rendering electric vehicles a risky option for primary transportation. Yet, as consumers seek to offset the effects of load-shedding and restricted power availability, domestic demand for lithium-ion batteries and energy storage has risen, and is expected to continue to grow by more than 7.5% over the period 2020-2025.

Other consumer concerns center on practicality and affordability, as compared with traditional ICE vehicles. Nearly all BEVs currently available in South Africa are premium passenger vehicle models, and therefore, less affordable. Given that long-distance travel is common in South Africa, consumers have also been hesitant about the limited travel range on first generation electric cars. That said, the driving range of newer models has improved to more than 400 km, while battery prices have declined, in part due to increased economies of scale.

Looking ahead, the premium passenger vehicle market will spearhead the e-mobility “revolution” currently underway in South Africa, supported by amended legislation, the introduction of new models, the rise of local production and increased consumer awareness of BEVs and their charging options. However, South Africa – and the continent at-large – still faces several obstacles before it can begin to compete with global players on cost, availability and technology associated with EVs and a clean energy economy.

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Grace Goodrich

Grace Goodrich

Grace Goodrich is a Publications Editor at Energy Capital & Power, where she writes about the intersection of energy, policy and global finance in sub-Saharan Africa's fastest-growing economies. Grace produces our Africa Energy Series investment reports in Angola and Equatorial Guinea (2019), as well as co-authored African Energy Chamber: Road to Recovery (2021).