Norway should be the benchmark for SA to aspire to as world steers to EV future

Tesla Model 3 electric vehicle is shown in this photo illustration taken in Cardiff, California, US. Photo: Reuters

Tesla Model 3 electric vehicle is shown in this photo illustration taken in Cardiff, California, US. Photo: Reuters

Published Mar 27, 2024


By Adil Nchabeleng

This past week major automotive industry players like BMW, Renault and VW have asked the European regulators to push back and delay their ambitious 2035 goal to phase out fuel cars in the European market.

Even the US under the Environmental Protection Agency (EPA) has had to loosen their targets to phase out fuel cars due to fierce auto industry lobbying efforts.

All US automakers are lobbying to block the US government’s EPA new fuel economy rules, asking the government to roll back on its plans to tighten the regulations around developing fuel consumption in all new production line cars.

The adoption will take time for automakers to hammer out their EV strategies, the building of infrastructure and the transition of people adopting lower carbon emitting vehicles.

Fossil fuel cars will be here longer than predicted as this transition takes place.

Automakers are looking at electric charging of batteries and hydrogen-powered vehicle manufacturing, among other technologies.

However, Microsoft founder Bill Gatesrecently dismissed the future potential of hydrogen powered vehicles and technology dominating the EV market. He is of the view that hydrogen gas is a very difficult process and highly challenging to extract and create into a fuel source.

Gates believes there are some heavy cutting edge technologies being explored in Silicon Valley that could potentially change the cause of energy sources in the future.

So where does that leave the rest of the EV industry? The future of cars is battery train power in the long run, but will not happen overnight.

Currently the Achilles' heel in battery technology storage and discharge and recharge cycles is capacity. An average manufactured EV today holds a battery capacity of a minimum of 7.5kWh battery storage capacity. If the capacity can be increased while shrinking the battery size and discharge rate and technology costs then the electric EV segment will continue growing into the future.

Today China accounts for about 10% of the overall global electric car manufacturing. China has moved from 1% market share in 2019 to a whopping 10% rise in market share in 2024. That is a significant jump in electric vehicle production volumes.

The Chinese government is very good at focusing resources on the industries it wants to grow. It has been doing the same for semiconductors recently.

Starting in 2009, the country began handing out financial subsidies to EV companies for producing buses, taxis, or cars for individual consumers. That year, fewer than 500 EVs were sold in China. But more money meant companies could keep spending to improve their models. It also meant consumers could spend less to get an EV of their own.

From 2009 to 2022, the government poured more than 200 billion renminbi (R551bn) into relevant subsidies and tax breaks. While the subsidy policy officially ended at the end of last year and was replaced by a more market-oriented system called “dual credits,” it had already had its intended effect: the more than 6 million EVs sold in China in 2022 accounted for over half of global EV sales.

The government also helped domestic EV companies stay afloat in their early years by handing out procurement contracts.

Meanwhile, the US during the Trump era was able to build a protectionist tariff barrier for Chinese EVs entering the US market. The US was clever. They created an Inflation Reduction Act, which created hundreds of billions of dollars in incentives to provide grant aid support to green energy and electric vehicles.

It is not a utopian dream to convert an entire nation's automotive industry into 100% electric vehicles.

The world’s leader in EV adoption is Norway, albeit with a tiny population of 5.4 million. Norway is also a highly advanced economy when it comes to energy generation. They use nuclear and hydroelectric dams to generate energy and have a well educated population with meticulous technical skills and know-how.

The Norwegian Public Roads Administration recently presented the statistics for December and the full year 2023. From January to December 2023, 104 590 electric cars and 10169 plug-in hybrids were newly registered. Over the past 12 months, all-electric cars accounted for 82.4% of all new car registrations. In January, the figure was 92.1%.

Reuters reports almost five out of six new cars sold in Norway last year were powered by battery only, with Tesla's share of the overall market rising to 20.0% from 12.2. The biggest brands by market share after Tesla were Toyota and Volkswagen with 10.8%.

Seeking to become the first nation to end the sale of petrol and diesel cars by 2025, oil-producing Norway exempts fully electric vehicles from many taxes imposed on internal combustion engine rivals, although some levies were introduced in 2023.

The Norway market share of electric cars could rise to 95% in 2024, a year before parliament's 100% goal is to be reached.

What does it take for a country to reach target levels such as Norway? Obviously South Africa will not be able to even imagine matching the kind of miraculous feat that enabled Norway to being fully operating only on electric cars. Because we don't have the proper infrastructure and the leadership needed to lead us into that electric utopian future.

There is just no capacity available for South Africa to even dream of being the electric vehicle capital of the world. This as we don't have electricity to power the most basic appliances in our homes.

Norway should be the benchmark for South Africa to aspire to as we steer towards an EV future.

Crown Prince Adil Nchabeleng is president of Transform RSA and an independent energy expert.

* The views in this column are independent of “Business Report” and Independent Media.