The country that raised Elon Musk looks to plug in electric cars

Cape Town // Electricity shortages or not, South Africa hopes to become a major provider of battery-powered vehicles and components to the global market. South Africa has the only auto manufacturing industry in Africa, with about 10 of the largest producers such as BMW, Volkswagen and Toyota in the country. Now, the nation intends to use the same duty-free incentive scheme that lured car makers here in the first place to encourage the manufacture of electric drivetrains and other critical components used in battery-powered electric vehicles. Across much of the world, battery-powered cars are becoming a more common sight. The US, Canada and Europe have policies and tax incentives to encourage motorists to go electric. Even in the UAE, which accounts for 4.2 per cent of global production of crude oil, Teslas and Nelectric taxis are on the roads. Dubai plans to invest millions of dirhams in incentives to achieve a target of 42,000 electric vehicles in the emirate by 2030. Across Sub-Saharan Africa, though, electric cars are a much tougher sell. Only 66 were purchased in South Africa in the whole of 2018, while no sales at all were recorded on the rest of the continent, according to Andrew Kirby, president and chief executive of Toyota South Africa. With the right incentives, however, Mr Kirby believes this could change. “I think the South African public is quite progressive, and it would not take too long to move towards alternative drivetrains if they were available at affordable prices, and with the necessary infrastructure.” South Africa already has a robust automotive industry, albeit modest by global standards. Around 365,000 passenger vehicles were sold in 2018, and almost 290,000 commercial lorries and buses, according to industry figures. At the same time, many of the largest car makers from the US, Europe and Japan have factories in the country. Recently, China’s fifth-largest vehicle manufacturer BAIC opened a plant in Port Elizabeth, on the east coast of South Africa. An incentive scheme that allows duty free imports on a vehicle for every make manufactured locally and exported has so far been a strong enough lure. As a result, companies streamline manufacturing to one or two models for the export market while importing a full range of marques. The result is a vibrant automotive manufacturing sector. These exports resulted in 334,000 vehicles sold offshore in 2018. Altogether, the local automotive sector, including vehicle components, brought 164.9 billion rand into the country over the same period, which represented almost 14 per cent of total South African exports “The automotive sector contributes 7.7 per cent of the GDP of this country,” says Tim Abbott, the chief executive of BMW South Africa. “500,000 jobs rely on the automotive industry.” BMW manufactures its X3 4x4 at its factory near Pretoria which it exports worldwide including to Germany. Meanwhile, BMW South Africa sells nearly 50 different makes it imports from its international plants. Mr Abbott says government support is crucial for local manufacturers, and points to Australia as a warning as to what could happen if state incentives are withdrawn. “The government in Australia chose not to support the automotive industry six years ago, and it took just five years for the industry to leave the country completely.” South Africa’s current set of incentives expires in 2020, and a revised version is expected to be introduced. This should include import tariff relief for companies that export electric powertrains - the essential elements of a battery-powered electric vehicle. Batteries, electric motors and related engineering components such as chassis, driveshafts and wheels would all fall under such a tariff relief programme. Currently, a tax of 25 per cent is levied on electric passenger vehicles, while electric buses and trucks carry a duty of 20 per cent. These are likely to stay, but export credits similar to that for completed vehicles are expected to be offered to manufacturers who produce critical components for EVs beginning in 2020. Rob Davies, the minister for trade and industry, says the country need not export fully built electric cars to take advantage of the global market. “We want to encourage automakers to trade in intermediate products such as [drive]trains. This is the direction we are headed.” South Africa’s interest in locally manufacturing battery-powered electric vehicle components and vehicles is a departure from its previous stance, which was to ignore them altogether. Instead, it put its energy into incentivising fuel cell electric vehicles. These rely on a catalytic reaction to generate electricity from hydrogen. They produce no emissions, except for water and oxygen, which is why Nasa has used them for decades in its space missions as a clean energy source. But now the government recognises that batteries, as well as fuel cells, can work in tandem, says Mr Davies. “Fuel cells can be fitted to a battery electric drivetrain and act as a range extender.” The government is no longer just betting on fuel cells – a technology that also has drawbacks and has lagged behind batteries as a cheap, easy way to power vehicles. Battery-equipped vehicles also use platinum in their design, and since South Africa produces some 70 per cent of the world’s platinum, the government and local industry have become eager to encourage their development. Meanwhile, a fierce rivalry globally between backers of battery-powered electric vehicles and fuel cell electric vehicles has emerged. The chief executive of US electric car maker Tesla, Elon Musk, has been widely quoted as branding the rival technology “fool cells”, one of his less colourful descriptions. Mr Musk, incidentally, hails from South Africa, and has occasionally hinted at making the cheapest car in the Tesla range, the Model 3, available in his native country. Last December he responded to a query on when Teslas would be seen in South Africa, saying: "Probably end of next year." Mr Davies, meanwhile, points out that both types of electric vehicles share many components, as all are ultimately electric vehicles; only the energy source itself is different. Whichever technology comes out on top, the need for certain critical components will still need to be met. “We’re no longer betting on one or the other technology – we're neutral on both.” Efforts to put South Africans behind the wheel of electric cars are gaining momentum. In February, Anglo-Dutch energy company Shell said it would commence building a countrywide network of charging stations. “This is part of our roadmap to 2025,” Shell South Africa spokesman Dineo Pooe said. “We will start small in 2019 and ramp up as demand increases. Shell together with its strategic partners will make this investment.” Several other national service chains are also considering introducing fast chargers to their forecourts. And Jaguar, the UK car maker now owned by Tata of India, will introduce its electric I-Pace to the South African market this month. It too will set up a chain of chargers along main routes, which it calls "Powerway". “It’s an inevitable technology, and Jaguar Land Rover is adopting it early,” says Brian Hastie, network director and electrification project lead at Jaguar. “As we become more electric vehicle savvy, this will become an everyday technology that the consumer will adopt very willingly.”

The country that raised Elon Musk looks to plug in electric cars

South Africa plans to use the same playbook that lured the likes of BMW, VW and Toyota