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EVs in South Africa: how not to make them the privilege of a few – SABC News

In the early 1900s, automobiles took the streets of industrial cities by storm, quickly supplanting horse-drawn carriages. Fiercely contested at first, the internal combustion engine won the technological battle against electric vehicles, which accounted for up to a third of the vehicles on the road before losing weight.

After more than a century of dominance, the age of the internal combustion engine will soon be over. The tide is turning towards electric vehicles. Driven by environmental regulations, funding programs and improved economics, electric vehicles will dominate in the coming decades. As the Intergovernmental Panel on Climate Change has reminded us that, as part of a broader push for sustainable mobility, we must aggressively transition to electric vehicles to meet our climate goals.

But the adoption of electric vehicles risks leaving many behind. In order to achieve a socially progressive development of e-mobility, proactive government intervention is required. This is especially true for South Africa, a country with high inequality and unequal access to transport.

Unless ambitious policy action is taken, electric vehicles will remain the privilege of a few for the foreseeable future. A dual strategy is necessary. It’s about encouraging purchases of entry-level EVs into the passenger car market, while encouraging the uptake of EVs on public transport.

risks and opportunities

I’ve been working with partners to understand that effects of the global e-mobility transition for South Africa. Our work also included the most appropriate interventions for the country to mitigate risks and maximize benefits.

An exclusive, elitist transition to e-mobility is one such risk. However, as examined in a recent Trade & Industrial Policy Strategies politics shortthere is an opportunity to make the rollout more inclusive in both individual and public transport.

First, the dual strategy would be to encourage purchases of entry-level electric cars.

Many, from politicians and government officials to civil society activists and trade unionists, will oppose this very idea. After all, why would the country support the sale of private vehicles? Only a third of South African households own a car and only upper-middle and upper-class households would be able to afford an electric vehicle, even an entry-level model.

The same argument would also be: Can’t we just let the market take care of itself?

Perhaps the answer to this would be if South Africa did not have an automotive industry or if all domestically produced vehicles were exported. But that is not the case.

South Africa has a well-developed automotive value chain that is often referred to as the country’s crown jewels industrial policy. And the local industry is closely linked to both national and European dynamics.

The local market matters. It accounts for 2 out of every 5 passenger cars made in South Africa. Additionally, about half of the new vehicle market consists of entry-level vehicles under R260,000. However, EV sales are insignificant. At the end of 2020 there were only 6,367 electric vehicles on South African roads. All electric vehicles, including hybrid models, accounted for less than 0.2% of new vehicle sales in 2020.

Still, a transition to producing more electric vehicles is crucial if South Africa is to keep up with developments in Europe. About 3 out of 5 passenger cars are made in South Africa are exported, mainly to Europe (three quarters of exports). Europe accounted for 60% (by value) of South Africa’s exports of motor vehicles and components in 2020.

And the European path is clear: no combustion engine or hybrid sales in most countries by 2035.

The cost to the sector – and South Africa’s environment – ​​of doing nothing would be catastrophic.

Some solutions

Electric vehicles are cheaper to buy. But they are more expensive to buy than their internal combustion engine counterparts. This is a problem because the domestic market is very price-sensitive, especially in the entry-level segment.

Temporary support for the full range of electric vehicles is recommended as an incentive for potential buyers. Support would need to bridge the gap between electric vehicles and entry-level combustion engine equivalents.

Stimulating domestic EV sales could be achieved through a direct, fixed purchase premium and ultra-soft loans backed by entry-level EV development finance institutions.

Strict conditions would be required to minimize the financial impact and keep up with global trends. Above all, the subsidy should expire in 2030 for soft hybrids and in 2035 for all other electric vehicles.

The availability of entry-level electric vehicles in the local market is a prerequisite for the effectiveness of the support. To this end, the tariff anomaly, according to which battery electric vehicles from the EU are taxed at 25% (compared to 18% for all other vehicles), should be eliminated.

Secondly, the introduction of electric vehicles in public transport must be encouraged. Nearly three-quarters of South Africans used public transport as their primary mode of transportation in 2019. Of those commuters who use public transport for mobility, 66% used minibus taxis and 12% used buses.

So far, knowledge about the use of electric vehicles in local public transport is limited. Cape Town is the only municipality that has experimented with electric buses, with little success. The buses proved unsuitable for the city’s geography and the bidding process marred by allegations of irregularities.

Electric minibus taxis are another route worth taking. There is no experience with this, but a pilot project is planned for Stellenbosch.

The rollout of electric minibus taxis is to be supported by a temporary extension Taxi recapitalization program Scrap bonus when buying electric vehicles.

In addition, lowering the financing costs for e-minibus taxis would further support the transition. Minibus taxis are considered risky and have to reckon with high interest rates when financing them. Favorable financing conditions for electric vehicles could be achieved through government-guaranteed loans or the provision of discounted debt capital. This is also proposed for passenger cars.

For bus fleets, the introduction of electric vehicles would essentially be driven by public procurement programs such as e.g. B. bus rapid transit systems.

Here, the public nature of the bus systems would allow a high degree of experimentation with innovative mechanisms and models. This could include grants as well as innovative funding arrangements and business models, e.g Pay as you saveBattery leasing or bus sharing.

Complementary measures could also be introduced. These include adequate charging infrastructure, differentiated electricity tariffs (to encourage off-peak charging), preferential access/parking or discounted licenses. Aside from being vital to South Africa’s industrial development, encouraging local manufacturing of all types of electric vehicles could also lead to cheaper vehicles in the long run.

More broadly, the “electric revolution” can make transportation greener. It also offers a unique opportunity to make it more socially inclusive.

Gaylor Montmasson-ClairSenior Economist, Trade & Industrial Policy Strategies (TIPS), University of Johannesburg

This article is republished by The conversation under a Creative Commons license. read this original article.

EVs in South Africa: how not to make them the privilege of a few – SABC News

Source link EVs in South Africa: how not to make them the privilege of a few – SABC News

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