Published on September 13th, 2020 |
by Remeredzai Joseph Kuhudzai
September 13th, 2020 by Remeredzai Joseph Kuhudzai
South Africa’s electricity utility company Eskom has been working with other stakeholders to promote adoption of electric vehicles in South Africa. One of the stumbling blocks to accelerating adoption has been the high sticker prices of electric vehicle (EV) models available in South Africa.
Due to the high taxes imposed on imported EVs, available models start from well above R600 000 ($36,000). South Africa imposes a 43% import tax on EVs — 25% import tax and 18% ad valorem — which makes EVs unaffordable for many potential buyers. The State of The Electric Vehicle Report highlights the progress so far, and shows that growth has been a bit slow due to the high import duties and also the limited number of EV models available in the market.
Chinese fossil fuel cars have been well received in South Africa, with Great Wall Motors’ Steed pickup truck doing well. The selection of GWM’s Haval brand models also seem to be doing well. You can get the Haval H1 vehicle starting from R2 600 ($155) per month. No wonder the Haval Models have been well received!
There could be a big opportunity for Eskom and their partners to accelerate adoption of EVs by bringing a new generation of affordable Chinese EVs to South Africa. They could start with partnerships with the likes of Great Wall Motors, which already has a presence in South Africa. Great Wall’s two Cats are worth looking into — that is the Ora R1 (Black Cat) and the Ora R2 (White Cat).
The Ora R1 is on our list of 7 ICE Killers to End the ICE Age. The Black Cat has some decent specs for a $7000 EV (price in China). For $7000, you get a 33 kWh battery, 35 kW motor, and 220 km WLTP range. Let’s assume the final price in South Africa will be around $12,500 including taxes and dealer margins. The Black Cat could unlock a decent customer base if monthly payments can come in at around R3500 depending on financing conditions.
Eskom and partners could also expand the range by looking at several promising new models in China, such as the Leap Motor T03 Deluxe and its impressive specs. The Leap Motor T03 features a 55 kW electric motor, maximum torque of 155 Nm, a 36.5 kWh battery that gives a decent range (NEDC) of 403 km. The battery is also equipped with an intelligent liquid thermal management system (heating + cooling), which is good for hot and sunny South Africa, especially considering some issues seen with battery degradation in the first-generation Nissan Leaf in this part of the world. Of course, we would also like to see the very affordable new Chinese smash hit, the $4,200 Wuling HongGuang Mini EV!
EVs could be the best route for Eskom to generate new revenues and also unlock efficiencies in a bid to return to profitability. According to Eskom’s Key Strategic Priorities May 2020 presentation, Eskom’s debt is approaching R450 billion ($27 billion) and it is unable to service debt from its own EBITDA and will have to borrow more to service debt. Eskom simply has to generate more revenues fast! Part of the measures being implemented by Eskom to reduce losses and improve margins include:
- Coal cost renegotiations
- Looking at fuel oil cost and consumption levels
- Diesel consumption reduction
- Repurposing power stations to create revenue streams
Even though Eskom’s generators are currently predominantly fossil powered, despite all the FUD (Fear Uncertainty, and Doubt) being pushed in some sections of the media regarding electric vehicles, the latest scientific studies confirm that EVs are much cleaner than ICE vehicles even if powered by a largely coal-fired grid. Grids also get cleaner with time as more and more renewables are added to the mix, and South Africa will not be an exception to that future.
The next question people will ask is how can we even think of EVs in South Africa with all the power cuts? Eskom is very much prepared and able to cater to EV owners; needs despite all the load shedding. According to Eskom’s System Status Briefings, a typical daily demand profile sees demand peaking well above 30,000 MW between 4:00pm and 8:00pm but dropping to a low of around 23,000 MW between 12 midnight and 4:00am. And what are most people’s cars doing between 12:00am and 4:00am? Parked in their garages!
This is where Eskom could derive new revenues — by encouraging people to charge during these off-peak times, unlocking capacity and improving efficiencies. A presentation by Darryl Chapman, Eskom’s e-Mobility Programme Manager, at last year’s African Utility Week, illustrates several scenarios on EV penetration simulations and the associated impact on Eskom’s grid.
Even at up to 50% EV penetration of registered cars in South Africa, the additional demand is not an enormous concern for Eskom. The report concludes that smart metering and demand management (possibly V2G) would be beneficial to both Eskom and the vehicle owners. Let’s hope Eskom and its partners can supercharge the EV revolution in South Africa.
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