South Africa needs to stop taxing EVs unfairly: Mercedes-Benz CEO

South Africa is the only major market in the world that levies higher importation taxes on electric vehicles than on polluting petrol- and diesel-powered cars, and that needs to change urgently.

That’s the view of Mark Raine, co-CEO of Mercedes-Benz South Africa, who was speaking in an interview on TechCentral’s new TC|Daily technology show.

“Whether you have a [sports car] or an ordinary car, you pay 18% import taxes into South Africa,” he said. “If you take electric vehicles, it’s 25%. I must be honest: this is the country only I know of where an electric vehicle is disadvantaged [in this way] compared to an internal combustion engine or petrol car.”

He said he has raised his concerns, including with government, about this discrepancy, which he said is harming sales of electric vehicles in South Africa. “This is something I have addressed quite vocally, and it’s something I am hopeful will be addressed in the near future.”

The challenge, he said, is that there are many stakeholders involved, including the South African Revenue Service, the department of trade, industry & competition, and the automotive industry itself.

“We are closely working together with government, which has a vast interest to drive the transition to electric vehicles, recognising that the South African market was a bit late in the transition.”

There is an urgent need for all stakeholders to work together on a “common understanding of why there is a lot of value to South Africa to drive this transformation” to EVs.

He said his view is that government has been listening “diligently” to the industry’s concerns and is “confident” changes will be made soon to support the move to e-mobility.

“There is a general interest and willingness from the government’s side to drive this forward [given that] the automotive industry is a huge contributor to the South African economy.”

Raine said government should prioritise three things to promote the shift to EVs. These are:

• Price parity: Raine wants an “equal playing field” for EVs and petrol/diesel-powered vehicles. Although some countries give tax incentives to consumers for EVs, government should focus initially on ensuring there is parity on the taxes so that EVs are not unfairly disadvantaged.
• Charging infrastructure: This, Raine said, needs a “uniquely South African” approach. “We can’t have charging infrastructure all around the country because there is a security aspect in South Africa. We need to be realistic about it. We need to collaborate between government and the industry and, say, shopping centres. Charging infrastructure is a vitally important topic – let’s do it right the first time. That requires a lot of thought and alignment between different stakeholders.”
• An holistic support system for EVs: This includes developing an after-sales service industry. There also needs to be a supply chain for battery replacements and the safe disposal of batteries when they reach end of life. “There need to be regulations put in place.”

Although Mercedes-Benz South Africa isn’t (yet) building fully electric vehicles at its East London manufacturing plant, the facility is producing C-Class plugin hybrids. Could an EV production line follow? “We need to see where the journey takes us,” Raine said on TC|Daily.

Despite the challenges facing the local industry, Raine forecasts that more than half of all new Mercedes-Benz cars sold in South Africa at the end of 2026 will be electric.  – © 2022 NewsCentral Media

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