Mercedes-Benz South Africa (MBSA) expects an increase in electric vehicle (EV) sales in 2023.
This is despite the high prices of many EV models and new energy vehicles (NEVs), in addition to the challenges of electricity supply and reducing the country’s burden.
Expected increase in demand
Mark Raine, co-CEO of MBSA and executive director of passenger cars MBSA, said about the increase expected last week in the launch to the South African market of the new luxury car EQE electric vehicle, which will cost R1.8 million including service. and maintenance plans.
It has a range of 645km and a better charger, which means it takes 15 minutes to recharge up to 250km.
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The launch of the EQE follows MBSA launching its EV foray into the South African market with the launch of the EQA, EQB, EQC and EQS models in the third quarter of last year.
Raine said between 300 and 500 EVs have so far been delivered to customers in South Africa in all brands, but predicts a strong pick up in EV sales in the country.
He said MBSA is only joining the EV “party” in South Africa as early as the third quarter of 2022 and that other brands are introducing EVs to the SA market faster than they are doing in other international markets.
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Raine said MBSA did not deliver the anticipated volume of EQ models to the domestic market due to supply challenges.
They expect a large increase in EVs and after 2026, sales from EQ’s electric vehicle portfolio will account for 50% of sales in South Africa.
“Why do I believe that? Because it will be a rapid transformation and whether we like it or not, the world will go in that direction – and mention South Africa and [saying] if we were to be different it wouldn’t work, especially in the luxury market which would be the early adopters,” he said.
Raine dismissed EVs marketed in South Africa as loss leaders, insisting MBSA’s EV pricing strategy is sustainable and also fair to consumers.
very expensive?
Responding to suggestions that EVs are too expensive in the South African market, especially with a poor economy and household disposable incomes under pressure, Raine stressed that “especially with EVs, it’s not just about the list price but the cost of ownership”.
Raine was unable to provide an update on the auto industry’s request to the government for price parity between import duties applicable on internal combustion engines (ICE) and NEV vehicles.
“Actually, I don’t have any. The current government may be dealing with bigger problems than looking at this issue. We know it is currently being discussed and evaluated but there is no update yet.
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Import duty
EVs are subject to 25% import duty while 18% import duty is paid on ICE vehicles.
Minister of Trade, Industry and Competition Ebrahim Patel published a Green Paper in May 2021 on the progress of new energy vehicles in South Africa.
The aim is to complete the strategy within 90 days of being gazetted so that the policy proposals are submitted to the cabinet for consideration in October 2021, but the policy is still not finalized.
Raine said the concept MBSA is working towards is that EV charging should rely more on renewable and solar energy than conventional electricity supply from Eskom.
He said that 99% of EV customers buy their vehicles in monthly installments and then the cost of ownership drops from the previous average of between R5 000 and R7 000 per month for fuel to a maximum of R2 000 per month in electricity charging costs.
Raine disputed the suggestion that the cost to consumers of installing a solar power system at home should be added to the cost of purchasing an EV.
“The concept is that you don’t increase the price for your car, you change the cost that you will pay for electricity for the household and the electric vehicle just complements it,” he said.
Raine also highlights the cost benefits of solar power systems if consumers run geysers and pool pumps from the system.
“A strong recommendation as a brand in terms of sustainability and environmental friendliness is that customers are looking for electric vehicles but at the same time they should look out of the box or switch to renewable or solar energy.
“Then it really stacks up as a business case. I’m really confident about it,” he said.
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Raine added that MBSA increased its sales by 37% in 2022 compared to the previous year, with December 2022 being the company’s best selling month since before Covid-19.
He predicts MBSA will increase its sales by double digits in 2023, “meaning 10% plus”.
This contrasts with a lower forecast for the industry’s new vehicle sales in 2023 by automotive business council Naamsa.
Mikel Mabasa, CEO of Naamsa, said earlier this month that GDP growth in South Africa continues to be adjusted downward and is now expected to be at 1.1% for 2023.
“According to the close correlation between new vehicle sales and the country’s GDP growth rate, single-digit growth in new vehicle sales can be expected for 2023 as the market returns to pre-pandemic levels in sales and exports,” he said.
Mabasa also highlighted the growing pressure on household incomes, adding that the trend of consumers buying cheaper and smaller cars, usually sport utility vehicles (SUVs) or crossovers, will continue in 2022.
This article originally appeared on Moneyweb and is republished with permission.
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