New road map proposes possible incentives for locally made electric vehicles

Submitted by: Jonathan Ramayia, Thursday, May 9, 2013

<p>The Nissan Leaf electric vehicle, procured by the Department of Environmental Affairs earlier this year to test solar charging of electric vehicles, is an example of an imported electric vehicle. The proposed road map by the dti aims to stimulate local electric vehicle manufacturing (Image Source: DEA).</p>

The Nissan Leaf electric vehicle, procured by the Department of Environmental Affairs earlier this year to test solar charging of electric vehicles, is an example of an imported electric vehicle. The proposed road map by the dti aims to stimulate local electric vehicle manufacturing (Image Source: DEA).

The government will reimburse manufacturers of electric vehicles 35% of their productions cost over a period of three years, should the proposed Department of Trade and Industry’s Electronic Vehicle Industry Road Map (EVIRM) be approved by Cabinet. Producers will have to locally produce a minimum of 5,000 electric cars in order to qualify for the proposed rebate. The EVIRM proposes a range of incentives aimed at stimulating the growth of the electric vehicle industry. Speaking at a meeting last Thursday in Johannesburg, Minister of Trade and Industry, Rob Davies warned that growth in the number of cars on the road was something that would have an impact on national carbon emissions, “we are well aware that as development takes place, transportation demand will grow. What is absolutely evident is that vehicle manufacturing must adopt new technology [for lesser emissions]”. The EVIRM, planned for public comment in June of this year focuses on local production of electric vehicles instead of importing electric vehicles as the country currently does.

Subsidies for electric vehicle manufacturers the priority

Currently, one of the main challenges of getting the electric vehicle market going in South Africa is the high price tag of European-imported vehicles. As no electric vehicles are produced in South Africa, Davies noted the priority was to incentivise production, rather than consumption.

The Nissan Leaf electric vehicle, procured by the Department of Environmental Affairs earlier this year to test solar charging of electric vehicles, is an example of an imported electric vehicle. The proposed road map by the dti aims to stimulate local electric vehicle manufacturing (Image Source: DEA).

In addition to the 35% manufacturers rebate, some of the other possible tax incentives on the consumer side include, personal income tax rebate, lower value-added taxes on the selling price of electric vehicles, and reduced electric vehicle registration costs. In addition to this Eskom is considering implementing a preferential tariff scheme for electric vehicle use.

Part of the Road Map would also be a programme to direct more attention to electric vehicles by creating awareness on the technology and why it is beneficial to the consumer.

R&D and infrastructure investment

Adding on to existing plans for infrastructural investment for conventional vehicles through the Department of Trade and Industry’s (dti) current Automotive Production and Development Programme (APDP), investment in infrastructure for local electric vehicle manufacturing will also be made. The overall goal of that programme is increasing the volume of cars manufactured in South Africa to 1.2 million annually by 2020 and to diversify the cars being manufactured.

In addition to providing infrastructure and incentives, the government is working together with the CSIR, IDC and Eskom to support and develop further research and development that would benefit the industry. The IDC, the CSIR and the Department of Science and Technology were all involved in the 2010 task team to develop the Road Map.

Electric vehicle steering committee and public comment

With the road map released for public comment in June 2013, the dti also intends to consult concerned parties before finalising the road map.

These include consultation with the National Union of Metalworkers of SA (NUMSA) as well as the National Association of Automobile Manufacturers of South Africa (NAAMSA) and other stakeholders to form a steering committee by July through which input will be channelled.

The Department will then revise the road map before submitting to Cabinet for approval by September 2013 this year.

Electric vehicles and carbon emissions

South Africa’s high dependence on coal as a source of electricity results in all operations that use electricity being carbon intensive. As a result electric vehicles powered from the South African grid may have higher carbon emissions than their conventional counterparts.  To address this challenge to electric vehicle use initiatives are underway to set up solar charging stations in the country. Earlier this year, the Department of Environmental Affairs announced a public-private pilot test project for an emission-free electric car, charged on solar power.  Three solar charging stations have been developed in the country but Minister Edna Molewa recently announced the Department’s ambition for 50 charging stations by 2015.

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Jonathan Ramayia