Electric cars, and plug-in hybrids, could account for as much as 20% of the new car market in South Africa by 2030. But the uniqueness of the domestic car manufacturing industry, the sprawling nature of the country’s cities, and policy uncertainty remain key stumbling blocks to this sector taking off.
This is according to an analysis by University of Cape Town (UCT) researcher Andrew Grant who recently wrapped up his Masters thesis with the Department of Economics.
‘I wanted to get an estimate of how many electric and plug-in hybrid cars there are in South Africa, and see how the market might grow between now and 2030, and 2050,’ he says.
To do so, he ran a model commonly used by market researchers to examine how new products perform in a market when there isn’t much data to work with.
He looked at how the price of first generation vehicles will influence consumer behaviour, and how vehicles become cheaper as scales of economy and technology improvements make them more affordable and better performing in second, third, and fourth generation vehicles.
The model also looked at how the rising cost of different vehicle fuels could inform buying behaviour. South Africa’s petrol and diesel prices have been highly volatile in recent years. However, while the cost of the country’s coal-fired electricity still makes this a cheaper energy source at the moment, the rate of increase of electricity off a lower base has been greater than liquid fuels, and will impact on the cost of running plug-in vehicles in the longterm.
‘It looks as though the purchasing price of these cars has a greater impact on whether people buy them, than the price of either liquid fuel or electricity,’ explains Grant.
Grant’s analysis assumed that the first generation of electric cars, all of which will be imported into the country, will be ‘simple, have a limited range, be expensive and there will be limited variety’. But later vehicle models will see technological improvements that will extend the distance that these cars can travel on a single charge, thus extending the range of the car. They will also become cheaper as production lines abroad start to benefit as the scales of economy kick into play.
‘With second, third and fourth generation cars, consumers start to respond to how the vehicles fit their pocket and meet their travel needs.’
The distribution of cities also impacts on the efficiency of these vehicles, and hence consumer behaviour.
‘Electric cars are most efficient at lower speeds, and in stop-start driving conditions. At higher speeds, such as between 80 and 100 kilometres per hour, they operate less efficiently than internal combustion engines.’
The big distances needed to travel around and between SA’s cities isn’t in favour of electric vehicles.
But South Africa’s policy environment remains uncertain, he says, something else which makes the private sector reluctant to invest in either producing or running an electric fleet.
‘In other countries where there is a focus on greening mobility, policy is very clear. It’s not about having aggressive policy, but clear policy.’
While the Department of Trade and Industry’s (DTI’s) roadmap for electric vehicles does allow for cash incentives to the private sector, the ceiling for qualifying for grants is that a manufacturer needs to produce 50 000 vehicles in a year. Grant argues that the market isn’t ready to absorb that number of electric cars yet, and there’s talk of lowering this figure to 5 000.
Until such a time, the market need will only be met by imported vehicles.
by Leonie Joubert