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South Africans are buying more electric cars – but high import duties limit variety, affordability

Business Insider SA
(Getty Images)
(Getty Images)
  • South Africans bought twice as many electric vehicles in 2021 than they did the year before.
  • But where globally, these sales accounted for 9% of the total global car market, in South Africa, less than 0.05% of vehicles sold were electric.
  • That rate of uptake is unlikely to change significantly unless South Africa can encourage a wider selection of vehicles, at different price points, produced locally.
  • To do this, the country is considering lowering import duties on components for electric vehicles, which are currently significantly higher than parts for internal combustion engine cars.
  • For more stories go to www.BusinessInsider.co.za.

Electric vehicle sales in South Africa doubled over the past year, but stubbornly high import duties and limited local manufacturing leave buyers with few options outside of premium brands.

A total of 218 electric vehicles (EV) were sold in South Africa in 2021, more than double the volumes recorded the year prior. That's aligned with the global growth rate, with more than 6.6 million EVs sold last year, bringing the total number of electric cars on the world's roads to 16.5 million, tripling since 2018.

EV sales accounted for 9% of the global car market in 2021, according to the International Energy Agency (IEA), which recently published its annual Global EV Outlook. The boom in sales is driven by demand in China, followed closely by Europe and the United States.

And while EVs are slowly gaining traction in South Africa, they only account for less than 0.05% of all vehicle sales recorded. South Africa isn't alone, EV sales in most developing countries are lagging, where "the few models that are available remain unaffordable for mass-market consumers."

Although EV infrastructure remains a concern – with South Africa's unstable power grid adding further complications – more than 300 public charging stations have already been installed. Audi South Africa recently announced that it would add 33 ultra-fast public charging stations. These stations, with a direct current of 150kW, can restore an EV's full charge in under an hour.

The bigger issue for EV uptake in South Africa remains the unaffordability factor, made worse by limited local production and higher import duties.

"In South Africa, the electric vehicles currently marketed are exclusively from premium brands," said Hiten Parmar, Director of the uYilo eMobility Programme, which looks to enable EV deployment in the country through pilot projects and capacity development.

"Audi, BMW, Jaguar, Mercedes-Benz, Porsche, and Volvo all have full electric models available, while the cheapest is from MINI. We still require a wider segment of models to drive further growth in the local market. This can only be realised within the mandate of the Department of Trade, Industry and Competition [DTIC] under the import duty framework, and local production incentives for manufacturing."

The DTIC has developed an "Auto Green Paper", which looks to set the roadmap for EV development in South Africa.

One of the ways in which the plan aims to put South Africa "at the forefront of advanced vehicle and vehicle component manufacturing" is by reducing the ad valorem tax and eliminating duties on EV components, which currently are subject to an import duty of 25% compared to 18% for an equivalent internal combustion engine (ICE) vehicle.

The DTIC also proposes incentivising innovation in the local EV manufacturing sector and reward the use of regional raw materials, including lithium, nickel, and cobalt, used in the production of EVs.

These reduced duties, incentives, and rebates will encourage local vehicle manufacturers – like Toyota, Ford, Volkswagen, and Nissan – to produce EVs in South Africa. If the DTIC's plan pans out, South Africans will have a wider selection of EVs to choose from and at more affordable prices.

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