It is impossible to draw a direct comparison between South Africa and other countries that have adopted strategies to push the uptake of electric vehicles (EVs), warns Frost & Sullivan research director Craig Parker.

He says that South Africa’s economic structure and demographic profile are unique, with a significant disparity in wealth.

“This will have direct implications on how government and the private sector can drive the uptake of EVs. It also means that strategies that have been implemented in developed economies may not be relevant in the South African context.”

In Europe, incentivising EV uptake through city-level initiatives that directly impact the consumer has been successful ­­– for example, implementing an incentive or penalty that directly correlates to the number of kilometres driven in a specific city area, explains Parker.

“These are usually the most effective as they hit the pocket of the consumer who drives the most, and there is a direct use-to-cost reward or penalty involved.

“However, the South African conundrum comes into play as people from different economic classes share the same roads.

“Imposing a blanket penalty on kilometres driven in, or to, a city centre [in a vehicle powered by an internal combustion engine] will have a significantly greater negative impact on the poor than those with higher income.

“Also, the major difference between South Africa and other countries is that our ‘public’ transport services are not entirely ‘public’,” adds Parker.

“It is dominated by the taxi industry, which is not governed by local city budgets.

“This means that while public transport policy may shift to EV technology, moving the taxi industry to EVs will require substantial buy-in from the associations and this may not be feasible.”

But how should South Africa then drive its EV initiatives – if any?

“It will be important to focus on the logistics industry and public transport initiatives,” says Parker.

“The last-mile delivery sector has significant potential for minimising carbon output and shifting to renewable EV solutions.

“Similarly, cities can adapt their own public transport systems and convert them to EV fleets.

“The shift from internal combustion engines (ICEs) to EVs in private transport and in the taxi industry would then be a natural process as EVs become more affordable and charging infrastructure more accessible.”

Fuel and Renewable Tax

National Treasury estimates that there will be a R90-billion yearly loss to the fiscus as fuel use and, therefore, government income from the fuel levy, finally disappears.

In the run-up to that day, fuel tax revenue will systematically decrease because of a decline in demand, says Parker.

During this period of limited demand, government may be able to take advantage of the fact that lower oil prices could allow them to increase the fuel levy.

“This, however, is not a sustainable scenario. Another, more controversial scenario is that government may institute a renewable generation tax that will target solar and wind generation by private individuals to power their homes and vehicles to replace the fuel levy.”

Many countries currently have renewable energy tax credits that incentivise the use of renewable energy, notes Parker.

In South Africa this is also the case. Since January 1, 2016, an amendment to Section 12B of the Income Tax Act (Act 58 of 1996) allows for depreciation in the year of commissioning of the full (100%) cost of a grid-tied solar photovoltaic system of less than 1 MW that is used for electricity generation by a business for use in its operations.

Current taxation related to renewables is mostly concerned with tax breaks and credits to drive installation.

But, once renewable generation becomes the norm and carbon cannot be taxed effectively, it is very likely that renewable generation will be taxed, says Parker.

“In terms of revenues associated with the fuel levy, such as for the Road Accident Fund, other alternatives, such as mandatory public ...