Since the arrival of the combustion engine in SA, it has dictated the development of the country’s landscape: city planning, infrastructure and employment. Today, 13-million vehicles are registered, about one vehicle for every five citizens.
Moreover, the local industry provides direct employment to 110,000 workers and supports 1,5-million indirect jobs, contributing 6,4% to GDP. Industry exports, mainly to Europe, totalled R175bn in 2020.
Now, the latest vehicle revolution is taking shape. There has been a global trend towards greener sources — considering that road transport contributes 23% of all carbon emissions — which has led to the rapid expansion in global usage of electric vehicles (EVs).
The global electric passenger car stock boomed between 2015 and 2021, with a 43% growth in sales year on year in 2019 and 2020 alone. EVs now constitute 4,6% of all new global vehicle sales, which are expected to grow by 24%-29% over the next decade.
In a move that could further bump electric vehicle sales, the EU has tabled a proposal to ban the sale of new combustion engines by 2035. This holds significance for SA, as the EU receives most of the country’s vehicle exports.
Naamsa (the National Association of Automobile Manufacturers of SA) has already expressed concerns that other countries, like Egypt and Morocco, are gearing up to grab the country’s export market while the government is slow in developing supportive policies. If we cannot meet their export vehicle requirements, the country could annually forgo R201bn in exports.
Worldwide governments are incentivising consumers — subsidies, tax savings and policy advantages — to buy EVs to adhere to climate commitments. This will drive further expansion, with some expecting that EVs will account for 70% of all sales by 2040.
The global EV market is gaining traction. Unfortunately, SA is lagging the required development in the EV space, bar some limited pockets of progress. The slow growth has mainly been attributed to high duties — and therefore high prices — lack of trust in electricity supply and inadequate infrastructure. Even the few EVs available on the second-hand market retail at high prices. Considering that the average South African employee earns R23,502 a month, EVs remain out of reach for most.
Despite this, the market is still set for an upswing. More and more vehicle manufacturers are announcing an end to combustion engine vehicles, which will eventually leave consumers with little choice but to acquire an electric vehicle. If current projections of incorporating more green energy sources and more people being capable of generating solar power at home, materialise, then Eskom will be able to provide sufficient electricity to support the added demand from the uptake of EV by local consumers.
But without meaningful change to the grid, increasing EVs in SA will do little to mitigate against climate change in the short to medium term. Now more than 90% of SA’s electricity is produced from coal. Should EV owners largely rely on Eskom-supplied electricity, it would negate the reasons related to carbon emissions of owning an EV.
While the expansion of the EV market in SA will happen, it is unclear how long it will take to reach a significant level. What is certain is that the switch from internal combustion engine vehicles to EVs is happening at a faster rate in developed countries, many of them SA’s trading partners. This should incentivise the government to actively drive expansion to avoid economic losses.
It will further ensure the country can capitalise on EV opportunities, like battery development, while mitigating the possible damage caused by the transition. Authorities will also have to work with stakeholders in establishing a tax system that does not kill EV adoption, while supporting the industry through subsidies.
Manufacturing will have to adapt. Future energy plans will be influenced by EV developments, the planning of cities and buildings will have to incorporate the technology at a rapid rate and, eventually, EV charging may even influence how people structure their day. It is a technology tsunami that will wipe the automotive landscape as we know it, but with it comes opportunities to boost the economy.
• Swanepoel is CEO of the Inclusive Society Institute. This article draws on the institute’s research report titled ‘The shape of the electric vehicle revolution in SA and the possible impact thereof on the Eskom grid’.
