It’s time for South Africa to drop import duties on EVs

The author, George Mienie

The South African government needs to follow in the footsteps of its Australian counterpart when it comes to incentivising electric vehicle (EV) sales and making them more affordable.

Australia has just passed what is known as the Treasury Laws Amendment (Electric Car Discount) Bill. In terms of this piece of legislation, EVs will be exempt from import tariffs and fringe benefits tax.

The implications are considerable. Practically, this will see the price of some EVs being reduced by up to A$9 000 (about R104 000) for businesses or $4 700 (about R54 000) for individuals.

There are also plans in Australia to convert the government fleet to EVs – and this fleet is substantial; in 2018, 38 300 new cars were sold to government customers in Australia. This will impact the second-hand market – the increased availability of used EVs could bring down prices for consumers substantially.

The South African government would be well advised to implement similar legislation. We have done a considerable amount of research into EV ownership, perceptions and expectations in South Africa. We know that consumer demand for EVs is growing exponentially.

According to the 2022 South African EV Buyers Survey (3rd Edition), searches for EVs have grown by 102% year on year, which is just one indicator demonstrating their growing popularity. Consumer Views of Adverts (Consumer Advert Views) for EVs are up by 134% – versus 25% for cars with internal combustion engines. Most importantly, enquiries for EVs are up by 74%, pointing to a larger audience of in-market car shoppers likely to buy an EV in the near future.

Simply too expensive

The initial price may, however, deter them from that purchase. Our survey established that the initial cost of purchase is the single biggest disadvantage when it comes to EV acquisition (65% of our respondents indicated this). Therefore, it’s crystal clear that EVs are simply too expensive in South Africa.

It’s time for the EV anomaly to change. South Africans pay 25% import taxes on EVs and 18% import taxes on internal combustion-engined vehicles. Hence, we’re in an odd situation where we pay disproportionately more for EVs than the rest of the world, only because they have an incentive structure which we don’t. The countries that have tax incentives in place have become very stimulated EV markets (with one of the best examples being Norway).

Countries such as Norway and Australia have shown what we need to do. It’s clearly time for South Africa to follow their lead. EVs are the future, and our country needs to be part of that future.

  • The author, George Mienie, is CEO of AutoTrader

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