Transport minister calls for incentives to ‘reward’ those moving to NEVs

The South African government’s long delayed incentivisation of new energy vehicles (NEV), comprising hybrids, plugs-in hybrid and full electrics, reportedly came under renewed focus at the Southern African Transport Conference in Pretoria on Monday.

‘We must reward’

Outlining the plan as a means of speeding up the reliance away from fossil fuels, Transport Minister Sindisiwe Chikunga announced subsidies “towards buyers of compressed natural gas (CNG) buses and electric and hydrogen run vehicles”, without disclosing the exact details in full.

Criticised by the industry for not doing enough to speed-up electrification in spite of the current energy crisis, Chikunga stated that the draft policy, known until now as the green paper, is being looked at, but that agreeing on the various terms “is no easy task”.

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“As the government, we may have to improve the design of incentives to reward those whose transport production or consumption activities result in positive externalities,” BusinessTech quoted Chikunga as saying.

“Taxes or subsidies are here imposed so that private costs absolve society’s full costs and benefits accruing from a transaction. Imposing taxes and subsidies, however, requires lots of data towards establishing the true outcomes.”

Unknown structure

At the same time, Chikunga remarked that conceptualising the incentive could be based on the type of transport the consumer opts for, whether it be road or rail.

“Policies may be put in place to subsidise capital expenditure, as well as operational expenditure related to public passenger transport. Modal subsidies for public transport buses, railways and taxis may be offered,” the publication further quoted the minister as saying.

“It should be noted that to these ends, we have already embarked on a process of developing and implementing a public transport subsidy whose benefits must accrue most importantly to the consumer of public transport”.

Pressure long coming

The announcement comes on the back of a report by AutoTrader in 2021 confirming more South Africans showing an interest in electric vehicles, but blaming the lack of incentives and the 25% import tax as reasons for not signing on the dotted line.

“The Department of Transport did introduce the Green Transport Strategy, which provides key incentives to produce and sell electric vehicles, but as part of a global industry, the domestic automotive industry cannot afford any delays,” Legacy Motor Group, Chairman, Mpho Dipela, said in a statement earlier this year.

“The automotive sector must play a vital part in the global electric vehicle value chain. This policy must be used to build a resilient raw material supply chain that supports the country’s efforts to be a global player.”

In releasing the monthly new vehicle sales in February, the National Association of Automobile Manufacturers of South Africa (Naamsa), also weighed in on the lack of progress by stating that “National Treasury’s disappointing posture not to announce any support programme for the manufacturing of NEVs and NEV components in the country has also dampened the spirits within the sector”.

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