South Africa should take a leaf out of China’s electric vehicle proliferation book
“GO WEST, young man, go West and grow up with the country” exhorted a notable New York newspaper editor in 1865. Well, times change, and instead, in 2024, we would do well to look to the East to see a glimpse of what the future holds.
I recently spent two weeks in China, meeting a range of stakeholders in the electric vehicle (EV) industry and seeing first-hand how the country has achieved a 50% EV market penetration this year.
Our trip coincided with the release of the International Energy Agency’s (IEA) Global EV Outlook Report for 2024, which highlights China’s dominance in the global transition to EVs, with new electric vehicle registrations in the country reaching 8.1 million in 2023, a 35% increase when compared to 2022.
While China, the US and Europe continue to lead on new EV sales and registrations, the IEA report highlights that many developing economies are making positive strides when it comes to the increased uptake of EVs.
This includes Thailand where, despite overall car sales decreasing from 2022 to 2023, EV registrations quadrupled to 90 000 last year, making up 10% of all car sales. In India, EV sales were up 70% year-on-year and, in Vietnam, 30 000 EVs were registered in 2023 versus 100 in 2021.
Finally, in Latin America, EV sales hit 90 000 last year, with Brazil leading the region registering 50 000 new EVs in 2023 – triple the registrations achieved in 2022.
What is the reason for the positive growth in EV sales in the countries? In every case, it was their government’s introduction of policy frameworks and incentives to promote the purchasing of EVs. This included the lowering of import and excise taxes as well as opening the market to well-priced EV models, with most of these manufactured in China.
The IEA report mirrors what I saw during my China visit: robust incentives and subsidies have been promoted for the adoption of EV vehicles, including a tax exemption for EV purchases and significant government investment in the country’s EV manufacturing industry. China has also collaborated with domestic and international carmakers to produce a wide range of affordable electric vehicles suitable for different consumer needs.
Chinese car manufacturers have also invested in technological innovation, which has resulted in significant advancements in battery technology, a reduction in costs and an improvement in the performance of EVs, which has made the category more competitive and appealing to consumers.
Rising environmental consciousness among Chinese citizens has also played a crucial role in driving the demand for electric vehicles.
People are more aware of the environmental impact of traditional internal combustion engine vehicles and are choosing sustainable alternatives that are good for the planet.
At the same time, the Chinese government has invested heavily in building a comprehensive EV charging infrastructure network across the country to make charging convenient and accessible while alleviating range anxiety for EV drivers.
China’s development plan for the new energy vehicle industry from 2021 to 2035 includes a specific focus on promoting and accelerating the construction of charging stations, including financial support for the building of public charging stations, favourable regulations and investing in charging technologies.
Many provincial and local governments have also set their own targets for the development of EV charging stations in their regions.
As a result, China has the largest EV charging network in the world, with over just more than 9.3 million charging stations registered in March 2024, and the number is growing monthly.
The China Electric Vehicle Charging Infrastructure Promotion Alliance reported that 716 000 new stations were added between January and March this year alone.
China’s EV revolution over a relatively short period is nothing short of remarkable, only 1 400 EVs were sold in 2010 compared to 8.1 million last year. It is therefore encouraging to see that other developing countries are adopting similar policies to stimulate EV sales among consumers.
By contrast, according to the IEA report, Africa, Eurasia and the Middle
East continue to lag behind, with less than 1% of total global EV sales coming from these regions in 2024. In South Africa, sales of EVs, traditional hybrids and plug-in hybrids accounted for just 1.45% of total new vehicle sales last year, with just more than 7 600 sold.
Our country’s slow transition to EVs is attributed to a range of factors including lack of policy certainty and incentives for the local manufacturing industry, high import duties for EVs, an unstable electricity supply and inadequate charging infrastructure.
Encouragingly, there have been positive developments in recent months, including the publication of the EV White Paper by the Department of Trade, Industry and Competition in December 2023, which has provided some policy direction.
Finance Minister Enoch Godongwana’s Budget speech announcement that manufacturers would be able to claim 150% of qualifying investment spending on electric and hydrogen-powered vehicles and that an additional R964 million to support the transition to electric vehicles was also welcome news.
However, since the announcement in February, there has been little detail provided on what the funding will entail. And, despite the White Paper focusing on the need to ramp up South Africa’s charging infrastructure to support the transition to EVs, there has been little attention given to this by the government.
Of even greater concern is that private companies who are investing in the development of charging infrastructure in South Africa, are faced with cumbersome processes and stringent requirements imposed by various government regulatory bodies in order to get approval for the building of charging stations.
Our company, Zero Carbon Charge, is investing R1.8 billion to build 120 EV charging stations approximately 150km apart that will be off-grid and powered by Solar PV and will be able to charge any electric EV at its maximum charging rate.
Critically, the network won’t place further strain on our national grid and will contribute towards South Africa’s net zero goals. However, stringent land use and environmental applications required by local, provincial authorities and the South African National Road Agency, as well the absence of a national policy on the development EV charging infrastructure, is hampering our roll-out efforts.
If South Africa hopes to catch up with other developing countries, it needs to take urgent action to create conducive environment for the sale of EVs and the building of off-grid charging infrastructure.
The action plan must include incentives to make EVs more affordable and be attractive to consumers, such as the tax exemption introduced by the Chinese government in 2014, and the streamlining of regulations and approval processes for the building of charging stations.
We are committed to playing our part in South Africa’s EV revolution and have written to Godongwana, Transport Minister Sindisiwe Chikunga and Trade, Industry and Competition Minister Ebrahim Patel, requesting engagements on the policy environment and bottlenecks hampering the mass take up of EVs by South Africans.
If we want to achieve real EV market penetration in this country and avoid being left behind, we need to take the bold steps taken by China over the past decade.