It says much for South Africa’s status in the world of electric vehicles (EVs) that we merit nary a mention in international analyses of the phenomenon. Not just us, but Africa as a whole. For all the talk of African market potential (Ford, celebrating its South African centenary this year, is still waiting for it to be realised, even for the good old internal combustion engine, or ICE), we remain a peripheral figure on the world EV stage.
While we continue to play the “should we, shouldn’t we” game, other, more mature markets are experiencing the realities of a headlong race against time to meet government deadlines for EV adoption. And it’s not always pretty.
Take China, where, according to state media, the motor industry employs about 30-million people. That’s rather more than the 120,000 or so employed by South African vehicle and components manufacturers. Then again, China has capacity to build about 43-million vehicles annually, compared with South Africa’s 800,000 — a figure that could near 1-million in the next few years if manufacturing newcomers Beijing Automotive Group Co and Stellantis meet their commitments.
Much of China’s vehicle manufacturing capacity, however, lies idle. The China Passenger Car Association reports that only 54.5% was in use at the end of 2022. In the second quarter of this year, South African motor companies employed rather more: 92.1% for cars, 77.7% for bakkies and minibuses, 55.5% for medium-sized trucks and 83.3% for heavy trucks.
Domestic Chinese demand for new cars is faltering. In the first seven months of this year, says Reuters, the local market grew by less than 2%. The saving grace was an 81% rise in exports, though off a small base.
China’s latest problem, Reuters reports, is a good, old-fashioned price war sparked by none other than the shy, unassuming Elon Musk. The billionaire businessman has slashed prices on his Tesla EVs since last year, forcing Chinese EV and ICE manufacturers alike to cut production costs to the core.
Thousands of workers have lost their jobs, many more have had their take-home pay slashed, and some motor companies have switched production to night-time, when temperatures are cooler and money can be saved on factory airconditioning.
In a survey early this year, state-owned publication Chinese Automotive News reported that 74% of the country’s estimated 300,000 automotive components suppliers said they had been asked by their motor company customers to cut costs by up to 10%.
South African domestic sales of EVs — hybrid and BEV — remain small even if the percentage growth is impressive
Despite these challenges in the world’s largest car market, and EV policy hesitation in others, global EV demand is booming — particularly for those vehicles with no ICE motor backup. A report by PwC shows that all-electric cars, known as battery-electric vehicles (BEVs), are enjoying strong sales growth.
In 10 major European markets, car sales grew by 17% in the second quarter of this year, compared with a year earlier. Within that, ICE sales increased by 8% but BEVs leapt ahead by 49%. In the US, BEV sales improved 67% over the same period, within total car market growth of 19%.
The biggest Chinese winner at the moment is the plug-in hybrid EV (PHEV), says Reuters. This vehicle, in which an ICE complements an independent electric motor, faces extinction in the EU and some other major markets over the next few years. Or does it? This week UK Prime Minister Rishi Sunak said his government was reconsidering its net-zero pledge to outlaw sales of new ICE vehicles after 2030. With his Conservative Party strongly favoured to lose power in a general election next year, it may not be his decision to make?
Globally, year-on-year PHEV sales fell by 2% in the second quarter of this year. In China, says PwC, they soared by 105%.
This could give China a louder voice in future African EV market discussions. Given the limited development and infrastructure across most of the continent, hybrid EVs are considered a better option than BEVs in the short to medium term. Many established Western manufacturers, however, are taking the BEV route. African new vehicle sales are too small, as a percentage of the global whole, to warrant a detour.
South Africa, naturally, would like to differ. Toyota and Mercedes-Benz already build some hybrids in their South African assembly plants — the latter exclusively for export. BMW and Ford have both announced plans to add hybrids to their current South African product mix.
South African domestic sales of EVs — hybrid and BEV — remain small even if the percentage growth is impressive. New EV car sales grew by 106% and used cars by 104% in the first four months of 2023. George Mienie, CEO of online vehicle retailer AutoTrader and a fierce advocate of EVs, is as convinced as ever that they will become a major factor in the local market.
No-one doubts it. But without a comprehensive consumer incentive strategy, the question is when. Or maybe we need a Chinese-style price war to bring vehicles within the range of ordinary South Africans. Somehow I doubt it.
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