SA’s Joule cash-strapped but Govern­ment share­hold­ers not un­duly wor­ried

Finweek English Edition - - INSIGHT - SVET­LANA DONEVA svet­lanad@fin­

CASH PROB­LEMS have again slowed the roll­out of South Africa’s elec­tric-pow­ered car – the Joule – push­ing it far­ther into the dis­tance. Govern­ment share­hold­ers in the project aren’t overly concerned about the de­lays in pro­duc­ing the Joule but the sit­u­a­tion may jeop­ar­dise SA’s po­ten­tial to de­velop an elec­tric ve­hi­cle com­po­nent sub-in­dus­try.

Op­ti­mal En­ergy – the Cape Town-based com­pany re­spon­si­ble for the devel­op­ment and mar­ket­ing of the Joule – has qui­etly changed the re­lease date of the car to 2014. It’s the sec­ond post­pone­ment since the car’s un­veil­ing at the Geneva In­ter­na­tional Mo­tor Show in 2008.

Early last year – while ex­hibit­ing the Joule at the Paris Auto Show – Op­ti­mal En­ergy voiced its in­ten­tion to start pro­duc­tion in 2012 and to have 100 units on SA’s roads in time for the 2010 Soc­cer World Cup. Nei­ther plan worked out.

“We’d love to be in the mar­ket right now but it’s all about the money,” says Op­ti­mal En­ergy sales and mar­ket­ing di­rec­tor Diana Blake.

Op­ti­mal En­ergy is 35,6% owned by the In­dus­trial Devel­op­ment Cor­po­ra­tion (IDC) and 43% owned by the Depart­ment of Sci­ence and Technology (DST). The two have so far given Op­ti­mal En­ergy R260m in fund­ing to build six pro­to­types of the Joule but the com­pany needs an­other R10bn to con­struct and equip an assem­bly plant in the East London In­dus­trial Devel­op­ment Zone and roll out the first batch of Joules to the pub­lic.

“We aren’t un­duly concerned, as we’re cur­rently part of the process look­ing at the op­tions for com­mer­cial­i­sa­tion,” a rep­re­sen­ta­tive of the DST told Fin­week. “The DST, technology in­no­va­tion agency and the IDC are cur­rently em­bark­ing on a num­ber of ini­tia­tives, which in­clude en­gag­ing strate­gic part­ners – at dif­fer­ent parts of the com­mer­cial­i­sa­tion value chain – to en­sure the ve­hi­cle is com­mer­cialised.”

The plan is for the Joule to have a 70% SA-made com­po­nent con­tent, which is in line with Govern­ment’s view of im­prov­ing the sus­tain­abil­ity of SA’s down­stream ve­hi­cle in­dus­try and its Au­to­mo­tive Pro­duc­tion and Devel­op­ment Pro­gramme, which be­comes of­fi­cial in 2013.

Technology to de­velop ma­jor parts – such as its en­gine – isn’t yet avail­able, but Blake is con­fi­dent SA’s man­u­fac­tur­ers can em­u­late the process op­er­at­ing over­seas once the elec­tric car in­dus­try re­ally gets go­ing. “There’s an es­ti­ma­tion that elec­tric cars will gain 5% to 10% of the world car mar­ket and that trans­lates to 50 000 ve­hi­cles/year,” says Jimmy Price, owner of East London-based Hi-Tech Au­to­mo­tive, which built the first six Joules. “The mar­ket for elec­tric cars is there and it’s grow­ing.”

Blake says the Bri­tish and Euro­pean mar­kets – where the ma­jor­ity of Joule ex­ports will be head­ing – are very re­spon­sive to elec­tric ve­hi­cles and start­ing a com­po­nent man­u­fac­tur­ing in­dus­try in SA could also take ad­van­tage of sup­ply­ing man­u­fac­tur­ers over­seas.

The prob­lem is that the Joule’s com­peti­tors aren’t rest­ing on their lau­rels. Gen­eral Mo­tors’ Chevro­let Volt, which went on sale in the United States last month, was named car of the year at this year’s Detroit Auto Show. Ac­cord­ing to me­dia re­ports, 500 units of the Volt have al­ready been sold and 10 000 units are due to be pro­duced this year. Mean­while, Nis­san’s Leaf is also al­ready avail­able for or­der in the US.

Blake isn’t wor­ried. She says the pie is get­ting big­ger and Op­ti­mal En­ergy will be sat­is­fied with “a smaller slice of a big­ger pie”.

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