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SA to get its first electric taxis, but a shift to EVs in the taxi sector may hurt fiscus

Business Insider SA
taxi
Aerial view of a Johannesburg taxi rank. (Image: Getty)
  • Taxi financier and insurer SA Taxi will soon trial electric taxis to assess their viability.
  • But shifting from petrol-based taxis to electric vehicles will come with multiple challenges, including making a dent in the fiscus, given the minibus taxi industry is one of the biggest fuel consumers.
  • With more than 200,000 taxis operating and 2,600 taxi ranks, the taxi industry carries out over 15 million trips a day.
  • For more stories go to www.BusinessInsider.co.za.

Taxi financier Transaction Capital plans to import electric taxis to assess their viability in the minibus taxi industry as the pressure mounts on corporates to adopt renewable energy solutions.

"We will be importing some electric taxis to assess their viability as the first step in what will likely be a medium- to long-term project," Terry Kier, SA Taxi's CEO said, in the company's integrated report this week.

"And we will remain an active partner in facilitating the shift to EVs in the minibus taxi industry, doing our part to resolve the complexities to the extent we can, given our sphere of influence," Kier said.

Facilitating the shift from petrol- and diesel-powered taxis to electric taxis will not be without its complexities, and it may put a dent in South Africa's fiscus, which collects billions in revenue from the industry's spend on fuel. The minibus industry is one of the country's biggest fuel customers.

While there is a great deal of interest in electric vehicles and their ability to transform public transport, the excitement must be balanced against its viability given the complexities of the South African context, Kier said.

"Beyond logistical considerations for the vehicles themselves, there are questions about the impact to the fiscus. The minibus taxi industry is a large fuel user and pays tax on every litre bought, which means a large loss of revenue," he said.

The industry has approximately over 200,000 minibus taxis and 2,600 taxi ranks, excluding those operating informally. It carries out 15 million trips daily across the country. While there is uncertainty about how much the industry is worth, given it is mainly cash-based, it is estimated that it generates about R90 billion on an annual basis, according to the International Race Relations' report on South Africa's minibus taxi industry.

Some of the challenges associated with adopting EVs in the country include the fact that the tax regime in South Africa and incentives for electric vehicles are not yet conducive for import, said Kier.

"An electric taxi will cost around double that of a locally manufactured diesel minibus taxi as things stand. However, government is currently reviewing excise duties on these vehicles, which should reduce import costs in time," he said.

"As heavier vehicles (due to the weight of batteries), electric taxis also require different towing infrastructure. There is an additional weight consideration for road infrastructure itself, considering the wide reach of the minibus taxi industry. Batteries also reduce the number of passengers compared to traditional minibus taxis," said Kier.

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