The automotive industry has given a cautious welcome to the electric vehicle (EV) manufacturing incentive announced in last Wednesday’s Budget 2024 speech to Parliament – but at the same time it must press ahead with its efforts to develop and meet the demand for EVs in South Africa. .
Finance Minister Enoch Godongwana announced that, “to encourage the production of electric vehicles in South Africa, the government will introduce an investment allowance for new investments, starting from 1 March 2026”.
While the incentive is attractive – it will allow manufacturers to claim 150% of investment spending on electric and hydrogen vehicles in the first year – the failure to cut the 25% tax on imported EVs is seen as a sign of foot dragging on the car. transition from an internal combustion engine (ICE).
Lebo Gaoaketse, head of marketing and communications at WesBank, said there had been “strong industry influence”, leading to “hope for a government announcement that will lead to a reduction in import duties imposed on electric vehicles.”
This, he said, will lead to a drop in the retail price of EVs.
“However, South Africa’s policy on EVs, as previously presented by Minister of Trade, Industry and Competitiveness Ebrahim Patel and more recently by Minister of Finance Enoch Godongwane in his budget speech, remains focused on advancing the country’s ambitions to be a hub for production of EVs and EV batteries, while stimulating demand through reduced import duties and incentives for end users will not be considered in the short term.
The failure to support the push for EV demand has meant that the auto industry is on its own in delivering so-called New Energy Vehicles (NEVs).
This was highlighted by the launch, hours after the budget speech, of the new Volvo EX30, the lowest priced EV yet to arrive in South Africa. While several low-end brands have produced EVs priced around R500,000, the R775,000 price tag on the EX30 is considered a new benchmark in the premium segment.
Greg Maruszewski, managing director of Volvo Car SA, unveils the Volvo EX30
For the first time, said Greg Maruszewski, managing director of Volvo Cars South Africa, it has brought the price of EVs in this segment to under one million rand.
He said before the launch event on Thursday: “For us, it’s a very important launch, because this car will put us in a new place, and it’s a place with more people than we talked to before. And that means moderation.
“So far the market is very small, but with this offer, because of the price and the offer, I feel we can grow the segment very quickly.”
As a result, the car is expected to make waves beyond Volvo sales alone, in effect acting as a rising tide that lifts all boats.
“It’s going to grow the segment, it’s going to grow awareness, and you’re going to have new customers. So it’s going to compete against a lot of the current ICE vehicles as well. It’s going to have a positive impact on the entire auto industry when it comes to EVs, for sure.
The EX30 has an estimated range of 480km, but the first few will raise eyebrows. With a large amount of anti-EV sentiment based on the lack of power, the most important feature is its ability to accelerate from 0-100 km / h in 3.6 seconds. According to Volvo, it is officially its fastest accelerating car ever.
With a typical battery capacity of 134kW, it can be charged from 10 to 80% in just over 25 minutes. It is also the first car to have a high-end sound bar installed in the car instead of a speaker array. A Harman Kardon high-end sound bar is placed inside the dashboard at the front of the car.
Maruszewski acknowledged that the launch was a resurgence for EVs in South Africa, especially in light of this week’s Budget speech. Janico Dannhauser, product and pricing manager at Jaguar Land Rover Africa, said it was commendable that South Africa sought to play an important role as a manufacturing hub and not just as an end user of EVs.
However, he said, “there is still an opportunity for quick success to stimulate demand for EVs among car buyers”.
“Important among these is the reduction of import duties imposed on EVs. A reduction in this issue could have an immediate impact on the affordability of EVs. Consumer-oriented incentive programs have also proven effective in international markets in encouraging EV adoption among users.
“Developing EV charging infrastructure is also an important issue that is currently being led by the private sector. More public sector involvement is needed to accelerate the expansion of South Africa’s public charging network, especially in areas that are outside urban centres. established.
“Therefore, there is scope for further improvement in policy reforms aimed at ensuring South Africa’s relevance in the evolving automotive world.”
Figures released this week by the Motor Trade Council (naamsa), showed that, while EV sales were low, they marked the only area of growth for the industry as a whole in the last quarter of 2023.
NEV sales with 19 industry brands increased by 59.9%, from 1,582 units in the fourth quarter of 2022 to 2,529 units in the fourth quarter of 2023.
The year-on-year increase was even greater: an increase of 421.7%, from 896 units in 2021 to 4,674 units in 2022, and a further increase of 64.6% to 7,693 units in 2023.
NEV sales breached the 1% share of the new vehicle market for the first time in 2023 comprising 1.45% of total new vehicle sales, compared to 0.88% in 2022.
Total sales of new cars in the fourth quarter of 2023 recorded a decrease of 5.4% compared to the corresponding quarter of 2022 and a decrease of 3.5% compared to the third quarter of 2023.
naamsa welcomed Godongwana’s speech with caution.
The financial incentive, said naamsa CEO Mikel Mabasa, was “an important step in attracting investment, promoting innovation, and driving the growth of the EV sector in South Africa”.
“We welcome the government’s decision to reallocate funds to specifically support the transition towards our wider transition towards new energy vehicles because this demonstrates a commitment to providing the financial support needed for the development and adoption of EVs.”
* A version of this story, by Arthur Goldstuck, first appeared in Sunday times.
* Arthur Goldstuck is the founder of World Wide Worx, editor-in-chief of Gadget.co.za. Follow him on Twitter and Instagram at @art2gee.