EV plan is a pipedream in a broken state
The gap between what the motor industry wants and what the government is willing to do has not been wider for years. The release of the electric vehicle (EV) white paper this week nonetheless represents welcome progress.
The industry asked for three key changes: an update to the SA automotive master plan to allow for a “temporary reduction on import duties for batteries in vehicles produced and sold in the domestic market”; a reduction of duties on imported EVs — at least to parity with internal combustion engine (ICE) cars; and a consumer incentive scheme to get more local motorists to buy EVs. It was an overreach by the industry all along, and it only got the first one.
While there is likely to be frustration among motor industry executives whose brands are abandoning ICE technology, the policy has not been born into a perfect world. It arrives in a country that we are politely referring to as fiscally constrained. Finance minister Enoch Godongwana is wont to speak more plainly: “I don’t have money.”
And so, local motorists will not only be exposed to the full, higher cost of EVs (priced in ZAR), they will continue to be battered by import tariffs that in theory incentivise local EV production. It remains to be seen whether this will work, as the local market is, in global terms, a vanishingly small affair and devoid of the heft required to nudge the course of the automotive supertankers. It will, however, be a relevant point when production allocation decisions are made for existing manufacturing plants. Locally built EVs will have an advantage over imported EVs.
All of this means that the uptake of EVs in SA will remain constrained in the short to medium term. Even as more manufacturers introduce cheaper models, they will remain, in the plainest language, expensive.
The white paper envisages the development of a local battery supply chain — hence the “temporary” reduction in tariffs on batteries and, presumably, an agreement with the EU foretold in the Just Energy Transition Investment Plan to eschew the rules of origin restrictions related to the free-trade deal. That is a noble aim but it is an almighty ambitious project for a country that builds 0.6% of the world’s cars.
The paper is probably good enough to keep those motor companies invested in production here interested, and it is churlish to dismiss out of hand the concept of an SA automotive battery supply chain. But a dose of realism is also indicated. This country is reeling from the self-inflicted wounds of state capture at Eskom and Transnet, and from a maelstrom of organised crime.
The EV white paper is a regulatory infrastructure for investment, but nobody will build these nice ideas until logistics, crime and energy are in hand.