Legislation, technology and infrastructure need to come together in order for electro-mobility to thrive in South Africa.
By Tim Abbott, CEO of BMW Group South Africa and Sub-Saharan Africa
There is no doubt that the long-term future of the automotive mobility includes electric. In 2016 nearly 774,000 Electric Vehicles (EV) () and Plug-In Hybrid Electric Vehicles (PHEV) were sold worldwide, pushing the number of electrically-powered vehicles on global roads over the 2-million mark. While that figure may represent just 1.1 percent of international vehicle sales, cuts in global emissions targets and a drive towards sustainability as well as energy-saving in the automotive sector mean that future trajectory of electric drivetrains has been accelerated.
The current growth in EV and PHEV sales is attributable largely to incentives and legislation put in place by governments, with aggressive emissions targets only attainable if electro-mobility is embraced on a massive scale. China one of the leading markets for EV and PHEV vehicles, with over half a million EV’s sold in 2016. One of the motivations behind the rapid adoption of EV’s in the country’s major cities is their exemption from license plate lotteries and significant registration fees that apply to vehicles with internal combustion engines. In all, China provides subsidies that amount to approximately 23 percent of the price of a mid-size EV car.
While the Chinese 23 percent subsidy may seem staggering, consider that the prices of EVs and PHEVs in Scandinavian countries are subsidized by as much as 49 percent (Denmark) and 45 percent (Norway). Subsidy percentages are lower, but still significant elsewhere: the United States subsidises purchase prices by 18 percent, Germany by 13 percent and Japan, 10 percent. In the UK (the largest market for EVs in Europe), the introduction of the 2017 Automated and Electric Vehicles Bill means that, amongst other things, every petrol station and motorway service center must install electric charging stations. It also establishes common technical and operational standards for these charging stations. The UK government’s aim is for the country to ‘lead the world in EV technology and use’, with almost every car and van to be zero-emission by 2050.
The BMW Group started its electro-mobility journey in 2008, when we began testing our MINI E fleet worldwide. The results gleaned from those tests not only formed the basis for our global electro-mobility strategy but they were also integrated into the BMW i range, which features our first fully-electric production car, the BMW i3 and the revolutionary BMW i8 PHEV – the most progressive sports car.
BMW i is the innovation driver for the BMW Group. We have successfully transferred the technology featured in the BMW i8 to models within BMW and MINI, firstly with the introduction of the BMW iPerformance model range and recently the MINI Cooper SE Countryman ALL4. The eDrive technology featured in BMW i3 has been transferred to the first fully electric BMW X3, which will make its debut in 2020 as well as a fully electric MINI which will be introduced in 2019.
Our long-term goal is to offer customers the broadest range of electrified premium cars. By the end of 2017, we will offer 10 models, which by 2025 we will increase to 25 – of which 12 will be pure-electric.
This year alone, we will deliver 100,000 electrified vehicles to customers, which will mean that by the end of 2017, there will be a total of more than 200,000 BMW Group electrified vehicles on the road.
The BMW Group’s global electro-mobility strategy includes South Africa. Since market introduction in March 2015, a total of 439 BMW i models have been delivered to customers in South Africa. In terms of the BMW i3 a total of 227 units have found homes, making it the most successful EV ever launched locally, while the BMW i8 is the market leader among PHEVs, with a total of 232 units delivered to customers. While we are proud of the strides we have made in this young electro-mobility market the role of legislation in the development of the EV market is pivotal – as clearly evidenced by the global trends.
One of the biggest stumbling blocks to a competitive EV market in South Africa is the current rate of import duty tax which currently stands at 25 percent. Imported petrol and diesel vehicles with engine capacities under one liter attract zero percent duties, and other traditionally-powered, imported vehicles under EU trade agreements attract duties of 18 percent. In December 2016, BMW Group South Africa submitted a formal application to the International Trade Administration Commission of South Africa (ITAC), for the reduction of the import duty on pure EVs. The submission calls for a zero percent duty on the import of all electric vehicles for a period of three years and thereafter, for a 10 percent import duty to be applied.
It is our belief that a reduction in the import duty on EV’s will create a more competitive market, with a wider offering for customers and with the added benefit of attracting potential long-term investment in electro-mobility in South Africa.
We believe that the reduction of import duty tax will not only make EV’s more affordable, but also will give the whole automotive industry the means to contribute to the expansion of a public charging network. Alternatively government can also support the growth of EVs without a direct monetary subsidy by introducing measures for EVs like designated parking areas, the use of bus lanes during peak hour traffic times and no charge on toll fees.
Our approach to electro-mobility is holistic and is typified by our 360° ELECTRIC strategy, of which the introduction of public charging infrastructure is key. Range Anxiety remains a stumbling block for many would-be buyers of EVs in South Africa, which is why a more comprehensive charging network is a critical tool to mitigating the anxiety.
With the market introduction of BMW i we established a nationwide public charging network of 54 charging stations, free to customers with ChargeNow cards. In Scandinavia, public charging stations are abundant in large cities. There is no reason why this cannot be the case in South Africa.
The proposed review of the import taxation issue is a the first step in a long journey, over time further adjustments may be required to enable sound thinking to become good practice in action. This is when we will see the benefit to all manufacturers who currently offer or have plans to introduce EVs in South Africa. More importantly, this is when we will see the conversation around electro-mobility take on real meaning.
The BMW Group will continue to be at the forefront of these conversations, helping bring about real, sustainable change in the electro-mobility field.