South Africa’s Technology Innovation Agency (TIA), a government organisation whose role is to support innovation to stimulate economic growth, launched an electromobility programme on the 13th of this month. The minister of Environmental Affairs launched the DEA’s Green Cars (Zero Emission Electric Vehicles) programme on the 26th of February. The Department of Trade and Industry (DTI) is (we are told) about to release the Electric Vehicle Industry Roadmap for South Africa. And electric vehicles are heading our way. The Nissan Leaf has arrived and the BMW i8 (hybrid electric) and i3 (fully electric) sports cars are due to arrive in 2014.
So things are happening; but why are they happening? What are the reasons for transitioning towards greater use of electric vehicles in this country and are we making the appropriate investments considering South Africa’s development and climate change objectives?
Transport contributes significantly to South Africa’s greenhouse gas emissions and transport demand is expected grow. Recent ERC research (soon to be published) has found that electric vehicles can significantly reduce emissions (even with our current grid) and contribute to energy security by providing a storage facility that can help smooth consumption of Eskom electricity and potentially facilitate decentralized electricity generation (e.g. through solar panels). Electric vehicles are also more efficient on a joule / kilometer basis than conventional vehicles. Add the benefits of reduced exposure to volatile oil prices, reduced oil imports, no local noise or air pollution and lower running costs and you have a winner.
However the cars do cost more and there is no obvious poverty alleviation benefit. Added to this are consumer concerns around range, reliability and performance. This anxiety is largely unjustified as many electric vehicles can meet the technical requirements of certain applications. You can’t drive a long way but you can commute quickly, safely, reliably and cheaply. Investments in infrastructure are also not as significant as people think. If cars are charged intelligently and consumers are educated, in many applications the benefits outweigh the costs.
The technologies to achieve these benefits are already available and as the grid gets cleaner and technologies more efficient and effective, these benefits will increase over time. So if we want more electric vehicles on the roads we can get them. Investments need to be made and government needs to create an enabling environment through financial and non-financial incentives.
Getting electric vehicles on the road is only one part of the story. Making electric vehicles and the components, infrastructure and support services is the other part. The development of the electromobility industry is the key objective when it comes to stimulating economic activity and creating jobs in South Africa. This is the focus of the DTI. The second Industrial Policy Action Plan saw an ambitious role for electric vehicle production in contributing to job creation. With the demise of the Joule, this ambition has been scaled back and the country is looking beyond the vehicle, to the full electromobility value chain as a potential source of job creation. But without a significant local market and uncertainty around the future demand for electric vehicles globally, there is considerable uncertainty around how to maximize potential benefits in this industry and whether in fact there could be substantial benefits that would warrant investing in this industry.
So what is government doing?
There does not appear to be a coordinated approach to stimulating the electric vehicle market and promoting the local industry. The Department of Environmental Affairs includes electric vehicles in the flagship programmes. The department believes that a transition to electric vehicles in South Africa is one of the best solutions to cut down on CO2 emissions, in line with the aims of the National Climate Change Response policy and ensure implementation of the resolutions of many Climate Change conferences
The Department of Transport is broadly supportive of electromobility as a long-term strategy but does not see it as a priority area in the short term. The DTI 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 and so it appears that the Electric Vehicle Industry Roadmap under development is not regarded as a core approach to developing the broad automotive industry. The roadmap shows intention to take steps towards greater electromobility in the country (through the proposed purchase of 3000 – 5000 electric vehicles per year by government from 2015) but that this is rather an attempt to make an investment without taking significant risk, to assess impacts and technology options, and to allow flexibility to adapt to changing market conditions and technologies. This model is supported by the TIA which acknowledges the need for innovation to happen on the ground. The TIA model focuses on the full electromobility value chain rather than the vehicle itself.
The DTI target of 3000 – 5000 electric vehicles publicly procured per year from 2015 is a soft target. This investment will incur costs with regard to setting up the supportive infrastructure and the premium charged on the vehicles. Government has not adequately assessed the viability and the costs and benefits of this investment. There is also no clear idea of the vehicles or technologies that would be adopted although the intention in the short term is to import vehicles such as the Nissan Leaf. While there is risk, uncertainty and a general lack of information around electromobility in the country, this approach, together with efforts by the TIA and other agencies conducting research in this area, will hopefully provide useful lessons to make an informed strategic decision 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 while there is significant market risk and uncertainty. The shortcoming with the current regulatory context is the lack of coordination and integration within and across departments. Without a local market high levels of localisation and value addition will not be possible. This “testing” phase may prove beneficial but in the longer term greater coordination of different departments and other stakeholders will be necessary.