For the most part automobiles have been powered by the trusted internal combustion engine since mass production began in the early 1900s. ICE technology has evolved, with suppliers and original equipment manufacturers investing extensively to improve engine performance while reducing emissions.
In this highly competitive sector the achievement of economies of scale is imperative. OEMs will be discerning in deciding what technologies to invest in, meaning if volume-driver markets ban ICE the business case to continue building and supporting ICE-powered vehicles is eroded, even if there are small markets where ICE may still be permitted.
The ability to achieve scale is a crucial factor to support a business case for OEMs and component manufacturers in deciding whether to invest in an economic zone. Input costs are another important aspect, given the competitive landscape in both the sector and the geographies. Notwithstanding the achievement of building a battery plant locally, the viability of the local industry is also contingent on the terms and conditions of bilateral trade agreements with target countries that would allow us to land SA-built EVs at competitive prices.
The current allowances see a higher import tax levied for EVs compared with their ICE counterparts. Additional incentives, such as reduced licence costs, subsidised tolls, parking and charging infrastructure, as well as dedicated supplier parks and preferential utility provision, could further drive up local demand and scale.
It would be great. But how do we charge the EVs with Eskom around and long distances in SA?
They must not nothing! In case you still have not grasped it, we don't have electricity.
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