A Look At The State Of The South African EV Landscape
The motor vehicle manufacturing industry is one of the most important sectors in South Africa, contributing 4.3% (2.4% manufacturing and 1.9% retail) to the gross domestic product. 633,332 vehicles were produced in South Africa in 2023. 399,594 vehicles were exported, which was a new record for exports, according to naamsa. On the retail side, including imports, domestic vehicle sales in 2023 increased by only 0.5% year-on-year in 2023 to 532,098 units compared to the 529,556 units in 2022.
About 99% of domestic vehicle sales are internal combustion engine vehicles. Although sales of battery-electric vehicles (BEV) came close to breaching the 1,000 units per year mark in South Africa for the first time ever, sales of battery-electric vehicles have been quite slow. Last year, 931 BEVs were sold in South Africa, almost doubling from 502 in 2022 and quadrupling from 218 in 2021. With only 1,955 BEVs sold since 2018, it’s clear to see that sales of BEVs have been slow in South Africa compared to similar auto markets around the world. This is due to the limited variety of BEV models in the country, coupled with the high import duties and taxes levied on electric vehicles.
This means most of the vehicles available in the global market would end up being quite expensive compared to their equivalent ICE vehicles if they were introduced in South Africa. This price difference would be more prominent in the smaller vehicle segments, making it a bit challenging to sell those EVs. Taxes in South Africa are set at 18% for ICE imports vs 25% for EV imports. There is also the ad valorem tax for EVs which pushes the cost of an EV to more than 2X that of the average price of a new ICE vehicle of a similar make/model in most cases. This is probably why the majority of EV models in South Africa are the more premium models where the pricing is more competitive than in the smaller vehicle segment.
So, when it comes to vehicles with some sort of traction battery pack and electric motor, which vehicles are South Africans starting to buy in some significant numbers? Well, traditional plug-less hybrids seem to be gaining some traction, although sales of these vehicles have been slower to pick up compared to other markets around the world.
Looking at the most recent full year data, the market shares for plug-in hybrid, BEV, and plug-less hybrids were 0.06%, 0.17%, and 1.2% respectively. These electrified vehicles had a combined market share of 1.5% of the South African new vehicle sales market.
Looking at Q1 2024 and comparing it with Q1 2023, sales of plug-in hybrids seem to show signs of recovery. 138 plug-in hybrids were sold in Q1 2024 compared with just 25 in Q1 2023. Perhaps this is a good time for the introduction of some of the more exciting PHEVs, such as the new BYD Shark pickup. On the BEV side, 98 more BEVs were sold in Q1 2024 (330 BEVs) compared with Q1 2023 (232 BEVs). Hopefully BEV sales will start to grow at a faster rate in the next few quarters as more affordable BEVs are introduced into the market, such as the longer range MINI and the BYD Dolphin.
With 99% of vehicles sold in South Africa being ICE vehicles (including imports), and with 99% of vehicles manufactured in South Africa (including vehicles exported from South Africa) being ICE vehicles, a lot more work is needed to promote the adoption of electric vehicles in South Africa. On the vehicles made in South Africa and exported to all parts of the world, with many of these destinations promoting the adoption of EVs, it will be a good idea for South Africa to start increasing the share of locally assembled and manufactured plug-in vehicles.
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