Thursday, November 27, 2014

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Electric Avenue: Are South Africa's Cars Going Electric?

South Africa is making a number of steps towards introducing electric vehicles. The potential benefits are numerous but so are the challenges.
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An early electric car in South Africa. Photograph by Pascal Parent.

It seems that South Africa’s automobiles might be on the road to going electric.

On 13 March, South Africa's Technology Innovation Agency (TIA) launched an electromobility programme. This came shortly after the Department of Environmental Affairs launched a Green Cars (Zero Emission Electric Vehicles) programme on 26 February. Meanwhile the Department of Trade and Industry (DTI) is set to release an Electric Vehicle Industry Roadmap for South Africa.

All this suggests that electric vehicles are heading South Africa’s way. The all-electric Nissan Leaf has in fact already arrived, while the BMW i8 (hybrid electric) and i3 (fully electric) sports cars are due to arrive in 2014.

This could have significant implications for the country’s greenhouse gas emissions. Transport is one of the main components of South Africa’s emissions and demand for transport is only expected to grow. As a recent study by Energy Research Centre (soon to be published) emphasised, electric vehicles could significantly reduce emissions even with the current grid.

Electric vehicles also have a range of other benefits: they are more efficient than conventional vehicles; avoid problems around volatile oil prices and reduced oil imports; emit lower noise and air pollution; and generally have lower running costs. This all makes electric vehicles a very intriguing prospect.

These considerations must, however, be balanced against other challenges. To begin with, electric cars cost more. There are also consumer concerns around their range, reliability and performance although these anxieties may be largely unjustified – one may not be able to drive a long distance but it is possible to commute quickly, safely, reliably and cheaply.

Considerable investments would also be needed in infrastructure though they too are perhaps not as significant as they initially appear. The technologies needed to make electric vehicles viable and affordable are already available and as the electricity grid gets cleaner and technologies more efficient and effective, these benefits will increase over time – so long as investments are made and the government create an enabling environment through financial and non-financial incentives.

Charging ahead?

However, getting the electric vehicles on the road is only one part of the story and there is a degree of uncertainty over how to maximise the potential benefits of the industry.

The government not only wants to introduce electric cars but build them as well as their components, infrastructure and support services. In particular, the government seems to recognise the potential of the electromobility industry in stimulating economic activity and creating jobs; the second Industrial Policy Action Plan saw an ambitious role for electric vehicle production in job creation. More recently, ambitions have been scaled back and the country is looking beyond the production of single vehicles to the full electromobility value chain as a potential source of employment.

The drawbacks to this strategy, however, are the facts that there is no significant local market as of yet and that there remains uncertainty around the future demand for electric vehicles globally.

So far, there also does not appear to be a coordinated governmental approach to stimulating the electric vehicle market and promoting local industry – and several departments are involved in one way or another.

The Department of Environmental Affairs includes electric vehicles in its flagship programmes and sees a transition to electric vehicles as one of the best solutions to cut down on CO2 emissions. The Department of Transport meanwhile is broadly supportive of electromobility as a long-term strategy but does not see it as a priority in the short-term. The Department for Trade and Industry is calling for greater local production in the electric vehicle value chain, but the Automotive Production and Development Programme (APDP) does not mention electric vehicles which suggests the Electric Vehicle Industry Roadmap is not regarded as central to developing the automotive industry more broadly.

Electric avenue

There are plans to take steps towards greater electromobility – through the proposed purchase of 3,000-5,000 electric vehicles per year by government from 2015 – but not in any radical way. This is rather an attempt to make an investment without taking a significant risk, to assess impacts and technology options, and to allow flexibility to adapt to changing market conditions and technologies.

On the one hand, the target of 3,000-5,000 electric vehicles per year is a soft target and has not been sufficiently examined. The investment will incur costs with regard to setting up the supportive infrastructure and the premium charged on the vehicles. The government has also not adequately assessed the viability and the costs and benefits of this investment. And there is no clear idea of the specific vehicles or technologies that will be adopted, although the expectation in the short-term is that vehicles such as the Nissan Leaf will be imported.

On the other hand, while there is risk, uncertainty and a general lack of information, this tentative approach – together with efforts by the TIA and other agencies conducting research in this area – will hopefully provide useful lessons to make more informed decisions in the future.

The result is a ‘living lab’ approach which will allow the country to keep abreast of developments, be ready to move in the direction of greater electromobility but not to invest too heavily in this area during a time of significant market risk and uncertainty. But while this testing phase may prove beneficial, in the longer-term greater coordination of different departments and other stakeholders will be crucial.

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