South Africa risks being left behind as the rest of the world moves to electric vehicles – but the introduction of grants and other incentives could improve adoption, says the Trade & Industrial Policy Strategies (TIPS) group.
TIPS is an independent, non-profit, economic research institution established in 1996 to support economic policy development.
“Pushed by environmental regulations, support programmes and improving economics, electric vehicles (EVs) – ie, traditional hybrid (HEV), plug-in hybrid (PHEV) and battery electric (BEV) vehicles – are set to become dominant in the coming decades,” it said in a recent research paper.
“Yet this electric revolution risks leaving many commuters behind, further deepening inequalities between and within countries. The risk of an exclusionary, elitist transition to e-mobility is high.”
To address this divide, the group said a dual strategy is necessary to foster the overall uptake of EVs as well as incentivising an inclusive rollout that benefits all in South Africa’s society.
“A temporary cash grant or innovative financial arrangement pegged at R80,000 for BEVs, R40,000 for PHEVs and R20,000 for HEVs, is recommended as the main instrument to incentivise prospective buyers.
“This level of support can bridge the gap between electric and petrol-fuelled cars for the first two quintiles of the market,” it said.
Complementarily, or alternatively, extremely low-interest loans, underpinned by development finance institutions (DFIs), could be offered to EV buyers, it said.
Second, the strategy should foster the introduction of electric vehicles in public transport, it said.
“The rollout of e-minibus taxis (MBTs) should be supported through a temporary, enhanced Taxi Recapitalisation Programme scrapping allowance for EVs – around R162,000 for BEVs – and low-cost finance,” TIPS said.
“The shift of bus fleets to EVs should be supported through a set of grants and innovative financial arrangements and business models, like Pay-as-you-Save.”