Elon Musk’s claim about high import duties disputed
THE NATIONAL Association of Automobile Manufacturers of South Africa (Naamsa) disputes Elon Musk’s view that South African vehicle tariffs are “extremely high”.
Responding to a Twitter query last week that read “Can we get Tesla in South Africa?” South African-born Musk responded: “Would love to, but import duties are extremely high, even for electric vehicles (EVs).”
Speculation ran rife last year that the trendy car manufacturer would expand in Africa by the end of 2019.
However, Tesla’s latest expansion push is into China with its first overseas factory in Shanghai.
Michael Mabasa, the chief executive of Naamsa, said yesterday that while Naamsa had no knowledge or direct information about Tesla’s plans to come to South Africa, South African tariffs were not high and with South African policies Tesla would be able to rebate its import duty to lower levels or even zero. Mabasa explained how South African vehicle tariffs work.
“Import duties on passenger cars and light commercial vehicles (bakkies) are at 25 percent ad valorem, which is low compared to other emerging markets where import duties can go as high as 100 percent. Even in the US, a large developed market, their import duty on light commercial vehicles, which make up about 70 percent of their market, is 25 percent. Our duty on EVs is 25 percent.”
He said an important aspect of the South African automotive industry was the relationship between imports and domestic production as governed by the automotive policy regime in South Africa. The previous Motor Industry Development Programme and current Automotive Production Development Programme encouraged domestic vehicle manufacturers to manufacture high volumes of selected models linked to export contracts to obtain economies of scale, coupled with low-volume models imported to complement domestic market mixes.
Mabasa said: “The vehicle manufacturers and independent vehicle importers can offset vehicle and original equipment component import duties through duty rebate mechanisms that have been structured to support both the competitiveness and sustainability of the domestic automotive industry. Import duties on vehicles and automotive components to manufacture the vehicles can, therefore, be rebated to zero or lower levels, depending on the amount of rebate the specific vehicle manufacturer or importer is able to generate under the programme. Tesla would also be able to rebate its import duty to much lower levels or even zero.”
Electric vehicle sales in South Africa reached 58 units in 2018, he said.
In South Africa are EV brands such as Nissan’s Leaf, BMW’s i3 i5 and Jaguar Land Rover’s Jaguar i-Pace. “Although EVs are making headlines, they are not yet a market force and currently comprise only about 2 to 3 percent of global vehicle sales. EV sales, in general, enjoy support from a large number of governments worldwide in an effort to reduce the transport industry’s carbon footprint within cities, especially those battling pollution.”
Mabasa said an increasing number of South African original equipment manufacturers had indicated that they planned to introduce EVs in the next two years in the domestic market. He said Naamsa was working on an EV position paper to support the evolution and advancement of electromobility in South Africa, anticipated to be finalised in early 2020.
“The aim is to inform the legislation and regulations required in South Africa to support electric vehicles,” he said.