Hope that electric vehicles will ease the strain on pockets ‘just a pipe dream’

Electric vehicles (EVs) are touted as the future of transportation and now that fossil fuel prices are soaring, some motorists are hoping EVs might ease the strain on their wallets, because electricity to charge them is cheaper than petrol and diesel.

But thinking that EVs will save you money remains will remain a pipe dream until the sky-prices of battery-powered cars start coming down.

These prices are largely the result of import taxes which, despite the environmental benefits of EVs, are higher on them than equivalent internal combstion engine (ICE) vehicles.

At the Auto Week show in Joburg this week, EVs were all the buzz.

Absa Vehicle and Asset Finance Managing Executive Charl Potgieter said there was a 177% increase in the number of EVs sold from 2020 (324 vehicles) to 2021 (896 vehicles) with 74% of South African buyers willing to switch to EVs provided they are in a similar price range of ICE vehicles.

Electric vehicles: High taxes and lack of variety

Energy expert Clyde Mallinson said the main problem with electrical vehicles was the very high taxes and a lack of variety.

“So far, the market has focussed on very high-end, expensive EVs, as the extra taxes don’t faze the wealthy. We need a mid-sized, mid-ranged EV to be available in South Africa, below the R500 000 mark, then watch the uptake,” he said.

Motor Industry Staff Association (Misa) Strategy and Development Chief Executive Officer Hermann Köstens said South Africa was far behind the global market with its uptake on EVs and has less than 10 000 of these vehicles on our roads.

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“According to the latest statistics issued by the National Association of Automobile Manufacturers of South Africa (Naamsa), less than 0,2% of total vehicle sales in the first two quarters of 2022 were EVs. The figures for the second quarter of 2022 were affected by the floods in KwaZulu-Natal and its severe impact on the ability of the Port of Durban to continue with imports and exports,” he said.

Köstens said predictions indicated there would be an increase of 30% per year in the sales of EVs between 2023 and 2027.

“Although this might seem positive, the growth will be coming from an insignificant low baseline and will not make a meaningful difference,” he added.

Electrifying public transport ‘better investment’

Köstens said the South African Revenue Service (SARS) must lower the tax margin when importing EVs to make it more affordable and attractive.

“Currently EVs are subject to a 45% import and duties tax. Import duties on vehicles and automotive components are set at 25% on light vehicles and 20% on original equipment components. This meant you pay 20% more import tax on an EV than on a carbon dioxide motor vehicle. There is no incentive from Government to make buying EVs more attractive to consumers,” he said.

Absa’s Potgieter said a better investment in vehicle electrification would be in public transport.

“In SA, public transport, specifically busses, presents a very good business case for electrification,” he said.

Potgieter said electrifying the public transport vehicles would make mass-based transit systems accessible across all income groups while being emissions-efficient.

But the growth in the EV business is electrifying. Naamsa Automotive Business Council CEO Mikel Mabasa said electric vehicles were already on sale in South Africa.”At the moment, customers can choose between 13 different models and we know of another six to be launched before the end of the year,” he said.

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Köstens said South Africa has ample charging stations for EVs.

“The infrastructure is there, but they are not connected because the total amount of EVs on our roads does not justify connecting more three-phase chargers. Eskom continues to battle to stabilise its power supply. On 31 August Eskom confirmed that the state-owned enterprise implemented 91 days of electricity cuts for a year. The result is that most South Africans feel the country is not ready for electric vehicles, mainly due to load-shedding,” he said.

marizkac@citizen.co.za