The days of government ministers being driven around in gas-guzzling luxury vehicles could be numbered - South Africa’s green procurement guidelines plans to put the brakes on public servants choosing fuel-propelled vehicles when they should be going green.
Driven by the Minister of Transport Fikile Mbalula and Minister of Trade, Industry and Competition Ebrahim Patel, are a number of actions aimed at transforming the motoring industry with a big push towards electric vehicles as part of its strategy towards a cleaner environment.
“The Green Procurement Guidelines that are being set by both the DoT and the Dtic will provide a foundation on how the procurement of vehicles within government will occur going forward,” said Ayanda Allie-Paine, spokesperson for Mbalula.
Electric vehicles will be mooted as an integral part of a radical uptake leading not only to a reduction in the country’s carbon footprint, but the plan towards job-creation and growing the economy by boosting the manufacture of these vehicles along with components.
She said the “Auto Green Paper on the Advancement of New Energy Vehicles in South Africa” includes engagement around possible adjustments to the green automotive import tax regime, provision of various incentives to enhance the uptake of electric vehicles, through to the development of green procurement guidelines.
In a jointly funded project, industry body for the motoring industry, the National Association of Automobile Manufacturers of South Africa (Naamsa) and the Dtic recently commissioned a study of the incentive framework under the Automotive Production Development Programme Phase 2 as part of the South African Automotive Masterplan 2021-2035, which came into effect on 1 July 2021.
The plan aims to produce 1,4 million vehicles annually by 2035, doubling manufacturing employment levels and increasing local content in vehicles from 40% to 60% on average.
According to the department’s green strategy, the national fiscus can also benefit by using biogas or electricity as transport fuels, as these are locally produced, as opposed to petrol/diesel, which are imported at the marginal level (or are made from imported crude oil, which represents about 90% of their manufactured value).
This would represent a significant increase in local economic activity, with associated forex (balance of payment) savings and the generation of more local taxes since a typical car uses about two to three times more fuel than the cost of the vehicle.
For higher mileage vehicles, such as minibus taxis, the fuel (imported) cost can be more than 10 times the cost of the vehicle.
But the options for financing green transport and economic incentives to support green transport may come at a cost for motorists with a number of regulatory measures on the cards to raise funds. This could hurt motorists who are already forced to pay a carbon tax on purchase of vehicles, in addition to import duties, as high as 42% levied on new vehicles.
But the department is keen on promoting behavioural change towards sustainable mobility alternatives and ensuring the low carbon transition of the sector, aligning and developing of policies which promote energy efficiency and emission control measures in all transport modes. The carbon tax policy can address the broader climate change goal tackling Green House Gas emissions.
According to the United Nations Environment Programme (UNEP), Green transport is defined as support for environmental sustainability through e.g. the protection of the global climate, ecosystems, public health and natural resources.
It could also mean that motorists could also be hit with a congestion charge on vehicles entering central business hubs. But international best practice with regard to congestion zone taxing will be taken into account before it is considered.
Norman Lamprecht, Executive: Trade, Exports and Research at the Naamsa Business Automotive Council said on Friday that the Green Paper on the advancement of New Energy Vehicles (NEV) in South Africa by the Dtic was drafted with industry stakeholders. This strategy provides the rationale for the move towards new electric vehicles domestically.
He said as an export-oriented automotive industry nearly 64% of South African manufactured vehicles are currently exported to global markets. In 2020, three out of every four vehicles were destined for Europe with the UK, the South African automotive industry’s top country of destination between 2014 and 2020.
Europe is currently at the forefront of banning of the sale of new internal combustion engine vehicles, recently announcing that it plans to bring forward the date from 2035 to 2030.
Considering the significance of Europe for the country’s automotive industry’s exports, Lamprecht said South Africa plans to speed up its efforts in the electric vehicle landscape to stimulate demand at home and to focus on the manufacturing of electric vehicles and components in future for export markets.
“Hybrids, which fall under the electric vehicle definition, are already manufactured in the country by Mercedes Benz (C-Class) while the Toyota Hybrid will be launched in October 2021,” Lamprecht said.
But he warned that the threat exists that the continent could increasingly become a dumping ground for the phased out internal combustion engine vehicles in favour of EVs in future.
Lamprecht said the CO2 tax that consumers have to pay on vehicles is aimed at moving domestic transport to a lower carbon footprint since electric vehicles don’t emit harmful gasses and would therefore contribute to a cleaner climate.
Global sales of electric vehicles increased in 2020, rising by 43% to 3,24 million units compared to the 2,26 million units sold in 2019, despite the overall fall in new vehicle sales in 2020 due to the Covid-19 global pandemic.
Europe has superseded China as the centre of electric vehicle growth. In Africa new vehicle sales are very limited outside of South Africa and the bulk of sales on the continent was of used vehicles.
Between 2016 and 2020, sales of electric vehicles in South Africa totalled 472 units. Plug-in hybrid vehicles sold numbered 529 units, and traditional hybrids totalled 784 units. In the same period 1,4 million petrol vehicles and 282 712 diesel cars were sold.
Lamprecht added that the tax burden on consumers regarding new vehicles in South Africa was excessive and comprised in the order of 42% on the price of a new internal combustion engine vehicle.
“The price differential of EVs compared to internal combustion engine vehicles and limited choices available in the South African market would represent the main challenges at present. New technologies are normally expensive at first until mass adoption of the technology occurs. Once greater choice and cheaper models are available electric vehicle sales will increase,” he said.
Swedish carmaker Volvo said its plans to sell only electric vehicles by 2030. In May, it released its first all-electric car, the Volvo XC40 P8 Recharge, expected in South Africa in 2022.
“If we are to reach our goals, we need to embrace the circular economy,” said Anders Kärrberg, head of global sustainability at Volvo Cars.
“This requires us to rethink everything we do and how we do it. We put a strong focus on integrating sustainability into the way we think and work as a company, and we are making it as important as safety has always been to us.”