1. Sector Overview
This section provides an overview of the global electric vehicles (EV) industry to provide context for the South African industry and discusses the unfolding of the EV market in the South African context.
1.1 Global Context
The year 2022/2023 was a significant year for EVs, which saw 14.2 million new Battery Electric Vehicles (BEVs) and Plug-in Hybrids (PHEV) delivered in 2023 (EV Volumes, 2024). There were 10Â million pure electric BEVs and 4.2Â million PHEVs and traditional hybrid electric vehicles sold in 2023, globally. This growth can be largely attributed to increased availability of EV models on the global market as well growing cost competitiveness due to rising fuel prices. Many national governments have implemented policies to phase out the sale of internal combustion engine (ICE) vehicles according to the International Council on Clean Transportation. Figure 1 shows a map of the countries which have committed to a 100% phase in of zero emission cars and light delivery vehicles.
Governments with official targets to 100% phase in sales of new zero CO2 emission cars and vans/light trucks by a certain date* (Status: Through February 2024)
* Includes countries, states, and provinces that have set targets to only allow the sale or registration of new battery electric vehicles (BEVs), fuel cell electric vehicles (FCEVs), and plug-in hybrid electric vehicles (PHEVs). Countries such as Japan with pledges that include hybrid electric vehicles (HEVs) and mild hybrid electric vehicles (MHEVs) are excluded as these vehicles are non plug-in hybrids.
** The Canadian province of the British Columbia has a regulation to enforce its 2040 target, as do California, Massachusetts, New York, Oregon, Vermont, and Washington for their 2035 targets. The European Union (EU) also has a regulation renforcing its 2023 target; it is applicable to the member states of the European Economic Area (EEA), that is the 27 EU member states and, pending adoption by the EEA Joint Committee, to some or all EEA European Free Trade Association (EFTA) states, which include Iceland, Liechtenstein, and Norway. Norway has set a 2025 phase-in target and Austria, Denmark, Greece, Iceland, the Netherlands, and Slovenia have set 2030 phase-in targets’ but those are not binding.
*** Zero-Emission Vehicle (ZEV) Declaration signatories to 2.A committed to phase-in targets by 2035 for leading markets and by 2040 globally. Countries with existing official targets (binding and non-binding) are not separately highlighted, including Austria, Belgium, Canada, Cape Verde, Chile, Croatia, Cyprus, Denmark, Finland, France, Greece, Iceland, Ireland, Liechtenstein, Lithuania, Luxembourg, Maita, Netherlands, Norway, Slovenia, Spain, Sweden, and the United Kingdom.
**** Zero-Emission Vehicle (ZEV) Declaration signatories to 2.B committed to work intensely toward accelerated proliferation of zero-emission vehicles.
Figure 1: Countries committed to a 100% phase in of sales of zero emission cars and light delivery vehicles
Source: International Council on Clean Transportation, 2024
There has also been significant growth in countries which have adopted policies to 100% phase in the sale of zero emission buses as shown in Figure 2. Public transport is seen as a strong business case for electrification due to high mileage and diesel consumption with low operating margins in the bus industry. There are additional benefits to using electric buses for public transport due to the reduction in noise and air pollution, which improves the user experience for the commuter.
Governments with official targets to 100% phase in sales of zero CO2 emission buses by a certain date (Status: Through February 2024)
* New medium- and heavy-duty vehicles at least 30% zero-emission in 2030 and 100% no later than 2050. Not necessarily reflected yet in an official state policy document such as a climate or transport strategy/plan, in a law, or in a similar framework.
** New medium- and heavy-duty vehicles 30% zero-emission in 2030 and 100% by 2040. Not necessarily reflected yet in an official national policy document such as a climate or transport strategy/plan, in a law, or in a similar framework. Other national and state level global MoU signatories are: Aruba, California, Curacao, Liechtenstein, Luxembourg, Quebec, Scotland, Sint Maarten, and Wales.
*** Targets apply to new energy vehicles (NEVs), which include battery electric, hydrogen fuel cell electric, and plug-in hybrid electric power trains.
Figure 2: Countries committed to a 100% phase in of sales of zero emission medium and heavy duty buses
Source: International Council on Clean Transportation, 2024
The freight and logistics industry also has characteristics of high mileage and fuel consumption and is a largely profit driven sector which would benefit from the operational cost savings of transitioning to an electric fleet. Improvements in battery technology, range, and recharging time over the past year have increased the operational and economic feasibility of electric medium and heavy duty trucks in the freight and logistics industry globally. There have been a number of successful pilot projects which have collected field data for the first time to prove this business case.
Governments with targets toward phasing in sales of new zero CO2 emission medium- and heavy-duty trucks by a certain date (Status: Through February 2024)
Note: Governments with an at least 40% sales target for zero-emission new trucks.
* New medium- and heavy-duty vehicles at least 30% zero-emission in 2030 and 100% no later than 2050. Not necessarily reflected yet in an official state policy document such as a climate or transport strategy/plan, in a law, or in a similar framework.
** New medium- and heavy-duty vehicles 30% zero-emission in 2030 and 100% by 2040. Not necessarily reflected yet in an official national policy document such as a climate or transport strategy/plan, in a law, or in a similar framework. Other national and state level global MoU signatories are: Aruba, California, Curacao, Liechtenstein, Luxembourg, Quebec, Scotland, Sint Maarten, and Wales.
*** New energy vehicles (NEVs), REFER TO battery electric, hydrogen fuel cell electric, and plug-in hybrid electric power trains.
Figure 3: Countries committed to a 100% phase in of the sales of zero emission medium and heavy duty trucks
Source: International Council on Clean Transportation, 2024
Global battery electric and plugin-hybrid EV sales have grown steadily, year on year, since 2015, with projections suggesting this trend will continue well into 2030 (Figure 4).
Figure 4: Projections for global battery electric and plugin-hybrid EV sales
Source: EV Volumes
There are currently no lithium-ion (Li-ion) cell manufacturers in Africa with global production largely centred around China, South Korea, and Japan as shown in Figure 5. CATL retains the highest market share in 2023 at 34% of the production market. BYD is in close second at 16% and LG comes in at third with 15% of global production.
Figure 5: Global market share of Li-ion cell manufacturing production by original equipment manufacturer (OEM) and country of origin
Source: Visual Capitalist, 2022
The African continent is home to many of the mineral reserves which are required in the EV and Li-ion cell manufacturing value chain. Figure 6 shows that there is great potential for the development of an integrated regional manufacturing supply chain in Southern Africa. This wealth of mineral resources is an important industrialisation lever which can be used to unlock economic growth and job creation in the region.
Figure 6: Reserves of electric vehicle minerals in the African continent
1.2 South African Context
South Africa is still largely an EV import market with limited local manufacturing of EVs and components locally with the exception of electric two- and three-wheelers. Li-ion cell importers in the South African market are largely assembling battery packs for stationary battery energy storage systems, EV retrofits and electric two- and three-wheeler manufacturing. Figure 7 below shows the EV value chain in South Africa and the current market bottlenecks.
Figure 7: The EV value chain and current bottlenecks in the South African market
Sales of electric private passenger vehicles in South Africa have been growing at a steady rate year on year as shown in Figure 8. EV sales in South Africa grew by 85.46% from 502 vehicles sold in 2022 to 931 vehicles sold in 2023.
Figure 8: Battery electric vehicle sales in South Africa 2015 to 2023
The EV White Paper (published in December 2023) envisions the rollout of manufacturing incentives by the Department of Trade, Industry, and Competition to assist the local automotive manufacturing industry to transition towards the local manufacturing of electric vehicles. Industrialisation bottlenecks such as the energy and logistics crises need to be addressed to facilitate new investment in EV manufacturing. The government will introduce an incentive for new investments, beginning 1 March 2026, in addition to the existing support under the Automotive Production Development Programme. This will allow producers to claim 150% of qualifying investment spending on electric and hydrogen-powered vehicles in the first year. Government has also reprioritised R964Â million over the medium term to support the transition to EV.
The breakdown of EV sales in South Africa by OEM is shown in Figure 9. The Volvo XC40 Recharge was the highest selling EV in the South African market in 2023 at 150 units sold. There were 28 EV models sold in South Africa in 2023 across 10 different OEMs. Sales of electric heavy duty trucks and light delivery vehicles were recorded in official statistics for the first time in 2023. This shows that the EV market in South Africa is diversifying away from what has been a focus on electric private passenger vehicles.
Figure 9: EV sales in South Africa by OEM in 2023
Traditional hybrid EVs achieved the highest sales in 2023 from 4Â 050 sold in 2022 to 6Â 495 vehicles sold in 2023. Plug-in hybrid EV sales continued to grow from 122 in 2022 to 267 vehicles sold in 2023. Battery EV sales experienced rapid growth from 502 sold in 2022 to 931 sold in 2023. Figure 10 shows the sales of new energy vehicles in South Africa from 2015 to 2023.
Figure 10: New EV sales in South Africa 2015 to 2023
It is widely accepted that having charging stations in locations that commuters can easily access is key to the adoption and growth of the EV market. In South Africa, the network currently consists of more than 450 publicly accessible charging stations (including dealerships) (GridCars, 2023). In total, 2Â 240 battery electric private passenger vehicles have been sold in South Africa to date. This means that there is a ratio of one public charging station for every 4.98 private passenger EVs in South Africa. The globally recommended ratio is 1:10 which means that South Africa has well developed EV charging infrastructure when compared to the actual number of EVs in the country. Figure 11 below shows a map of all public EV charging stations in South Africa.
Figure 11: Map of all public EV charging stations in South Africa
Source: GridCars, 2024
1.3 Market sizing the EV opportunity in South Africa
The total addressable market size for EVs in South Africa has been estimated using the historical live vehicle population data from the National Traffic Information System developed by the Road Traffic Management Corporation as shown in Table 1.
Table 1: Total addressable vehicle market for in South Africa 2015 to 2023 (Source: Road Traffic Management Corporation)
Annual new vehicle sales in South Africa by vehicle type is shown in Table 2 which is indicative of the potential annual market size for new EV sales should market price parity be reached.
Table 2: Annual vehicle sales in South Africa by vehicle type
South Africa has a well-developed automotive manufacturing industry that exports a majority of the vehicles that are assembled locally. There is also a well-developed network of Tier 1 and Tier 2 automotive component manufacturers in South Africa which supports local content inclusion in the automotive assembly and after sales industry. Presently there are three main automotive manufacturing hubs in South Africa, which are located in the Eastern Cape (EC), KwaZulu-Natal (KZN), and Gauteng (GP) (Figure 12). The EC has attracted significant automotive manufacturing investment despite having lower commuter patterns compared to GP, the Western Cape (WC) and KZN. This is due, in part, to the East London and Coega Special Economic Zones which are close to sea and river ports, respectively.
Figure 12: Map of the automotive manufacturing hubs in South Africa
Source: NAAMSA, 2022
Table 3 shows the key export markets for vehicles manufactured in South Africa. Europe remains the largest export market, with the overall export numbers nearly returned to pre-COVID19 levels. This automotive export market is potentially threatened by the European Union phasing out the sale of new ICE vehicles beyond 2035.
Table 3: Total addressable annual market for EV manufacturing in South Africa
1.3.1 Electric micro-mobility for last-mile delivery
According to Frost and Sullivan, the demand for last-mile delivery services due to the eCommerce boom in South Africa is projected to grow at an annual compound rate of 8.5%. The current, total addressable market size for electric micro-mobility for last-mile delivery in South Africa is estimated at around 50Â 000 vehicles. This is expected to grow to 90Â 000 vehicles by 2030 as shown in Table 4.
Table 4: Total addressable market size by volume and rand value
| Year | Total addressable market size by volume | Total addressable market size by Rand value | ||
|---|---|---|---|---|
| Electric bicycle
Unit cost: R40 000 |
Electric motorcycle
Unit cost: R90 000 |
Electric three-wheeler
Unit cost: R150 000 |
||
| 2024 | 50 000 | R2 billion | R4.5 billion | R7.5 billion |
| 2030 | 90 000 | R3.6 billion | R8.1 billion | R13.5 billion |
The rising cost of fuel over the past year has strengthened the business case for last-mile delivery drivers to make the switch from an ICE motorcycle to an electric two- or three-wheeler alternative. Electric two- and three-wheelers have a higher capital expenditure (CAPEX) than an ICE motorcycle however, the operational fuel cost savings are significant as shown in Table 5. The combined CAPEX plus operational expenditure (OPEX) cost of using an ICE motorcycle over seven years, is higher than the combined CAPEX plus OPEX of using an electric two- or three-wheeler over the same period assuming an average annual mileage of 36Â 500 km per year or 100Â km per day. There is a trend of electric two- and three-wheelers being leased out for a weekly or monthly rate to delivery drivers in South Africa which is proving successful. Some success stories of companies that have rolled out this EV as a Service model include Green Scooter, MellowVans, Green Riders, Valternative Energy and Stroom E-Cargo bikes.
Table 5: Business case for electric micro-mobility for last-mile delivery
Figure 13: Business case for electric micro-mobility for last-mile delivery
1.3.2 Electrification of public transportation in South Africa
The minibus taxi industry in South Africa is the largest public transport sector by number of passengers, number of vehicles, and accessibility of service. Electric minibus total addressable market size projections 2024 to 2030 are depicted in Figure 14.
Figure 14: Total addressable market size for electric minibuses in South Africa
The formal bus industry in South Africa is largely regulated and subsidised and the total addressable electric bus market size is shown in Figure 15 and projected for 2030.
Figure 15: Total addressable market size for electric buses in South Africa
Table 6 shows the business case for electrification of public transportation in the South African market. A typical bus used in the public transport sector will complete 60Â 000 km of mileage a year. Therefore, a transition towards the use of electric buses in the public transportation sector in South Africa, would result in an operational saving.
Table 6: Business case for electrification of public transportation in South Africa
There is a strong business case for bus fleet managers to consider switching to an electric bus alternative if they have buses in their flee that have an average annual mileage of 60Â 000 km or more as shown in Figure 16. This is due to the high operational fuel cost savings that are achieved from switching from a diesel bus to an electric bus in the public transport sector. The combined CAPEX plus OPEX of a diesel bus traveling 60Â 000 km a year is higher over a ten-year period than that of an electric bus alternative. This is despite the higher CAPEX cost of electric buses which is estimated at R7Â million per vehicle. Golden Arrow Bus Services has successfully piloted the use of electric commuter buses in Cape Town and are planning on procuring 60 electric buses a year to transition their diesel bus fleet to electric.
Figure 16: Business case for use of electric buses for public transportation
There is a strong business case for the use of EVs in the minibus taxi industry in South Africa. Minibus taxi owners with vehicles that travel at least 72Â 000 km a year should consider switching to an electric alternative due to the operational cost savings that can be accrued. The combined CAPEX plus OPEX cost of a diesel minibus taxi over ten years is higher than that of an electric minibus alternative as shown in Figure 17. This is despite the higher CAPEX cost of electric minibus taxis which is estimated at R1.5Â million. Flx EV has recently piloted the first electric minibus taxi in South Africa and is currently undergoing field tests to confirm operational feasibility.
Figure 17: Business case for the use of electric minibus taxis for public transportation
1.3.3 Electrification of freight and logistics in South Africa
The total addressable market size projections for electric light delivery vehicles from 2024 to 2030 are shown in Figure 18.
Figure 18: Total addressable market size for electric light delivery vehicles in South Africa
The total addressable market size projections for electric heavy duty trucks for 2024 to 2030 are shown in Figure 19.
Figure 19: Total addressable market size for electric heavy duty trucks in South Africa
Table 7: Business case for the electrification of freight and logistics in South Africa
Figure 20 shows that there is a business case for the use of electric LDVs for urban logistics use cases with an average annual mileage of 25Â 000 km. The combined CAPEX plus OPEX of a petrol or diesel LDV over a period of ten years is higher than that of an electric alternative. This is due to the operational fuel cost savings that are achieved by switching to electric despite the higher CAPEX cost of the electric LDV. Everlectric has successfully rolled out a fleet of electric panel vans in the urban logistics sector in South Africa.
Figure 20: Business case for the use of electric light delivery vehicles for urban logistics in South Africa
The business case for the use of electric heavy duty trucks for freight transport is for fleets that have an average annual mileage of 85 000 km a year or more as shown in Figure 21. Truck fleets that frequently travel the Durban to Gauteng corridor would save operation fuel costs by switching to an electric alternative. The CAPEX cost of electric trucks is still quite high but is projected to become more affordable as production economies of scale begin to stabilise prices. Once the CAPEX cost of electric heavy duty trucks becomes more affordable, the business case for fleets with lower annual mileage figures will become feasible. Scania and Volvo have both rolled out electric heavy duty truck pilot projects in the South African market. Volvo’s pilot with KDG logistics in KZN is one of the world’s first electric auto-carrier trucks.
Figure 21: Business case for the use of electric heavy duty trucks for freight transport in South Africa
2. Policy and Regulation
The policies and regulations in Table 8 have influence on the EV ecosystem in South Africa with regards to regulations, standards and specifications and industrial incentives.
Table 8: Policies and regulations affecting the electric vehicle industry in South Africa
| Name of policy or regulation | Government department | Link to policy | Summary of policy |
|---|---|---|---|
| South African Green Transport Strategy 2018 to 2050 | Department of Transport | Link | To reduce South Africa’s transportation related greenhouse gas emissions by 50% by 2050 |
| Electric Vehicles Regulatory Framework | Department of Transport | A framework from which to develop future EV regulations with regards to vehicles and charging infrastructure | |
| Electric Vehicle White Paper 2023 | Department of Trade, Industry and Competition | Link | An action plan of 10 measures to assist the South African automotive manufacturing industry to transition towards the local production of EVs and six measures to develop the EV ecosystem in South Africa |
| South African Automotive Master Plan 2021 to 2035 | Department of Trade, Industry and Competition | Link | Aims to expand the local automotive manufacturing industry to 1% of annual, global production and increase local content inclusion to 60% by 2035 |
| People-carrier Automotive Investment Scheme (P-AIS) | Department of Trade. Industry and Competition | Link | The P-AIS (a sub-component of the AIS) is designed to stimulate a growth path for the people – carrier vehicle industry through investment in new and/ or replacement models and components that will result in new jobs or retention of existing jobs and/ or strengthen the automotive value chain |
| Medium and Heavy Commercial Vehicles Automotive Investment Scheme (MHCV-AIS) | Department of Trade, Industry and Competition | Link | The MHCV-AIS (a sub-component of AIS) is designed to stimulate a growth path for the Medium and Heavy Commercial vehicle industry through investment in new and/ or replacement models and components that will result in new jobs or retention of existing jobs and/or strengthen the automotive value chain |
| Automotive Investment Scheme (AIS) | Department of Trade, Industry and Competition | Link | The Automotive Investment Scheme (AIS) is an incentive designed to grow and develop the automotive sector through investment in new and/ or replacement models and components that will increase plant production volumes, sustain employment and/ or strengthen the automotive value chain |
| Automotive Production and Development Programme (APDP) | South African Revenue Services | Link | The APDP is a production incentive scheme for the motor industry aimed at promoting production volumes in the specified motor vehicle industry, promoting added value in the automotive component industry thus creating employment across the automotive value chain |
| The Carbon Tax Act 15 of 2019 | South African Revenue Services | Link | Enacted in June 2019, the Act gives effect to the polluter pays principle for large emitters and helps to ensure that firms and consumers take the negative adverse costs (externalities) into account in their future production, consumption, and investment decisions |