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Electric Cars: Will SA switch on?

The Tesla Model 3 is set to hit South Africa next year – but are our roads and drivers ready? And in a global market where at least one car company boss doesn’t want you to buy his electric vehicle, is there really a future for electric cars? Mark van Dijk finds out.

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The Tesla Model 3 is set to hit South Africa next year – but are our roads and drivers ready? And in a global market where at least one car company boss doesn’t want you to buy his electric vehicle, is there really a future for electric cars? Mark van Dijk finds out.

The electric car boom is about to hit South Africa… and you won’t hear it coming. Literally, you won’t hear it, because – infamously – electric cars are quiet. Unlike the petrol- and diesel-fuelled vehicles we’re all driving, electric vehicles barely make a sound when they’re running. For many, that’s part of their appeal. Electric cars create less noise pollution, along with their significantly lower carbon emissions and lower running costs.

For many others, though, that silent approach is part of the problem with electric vehicles (EVs). Last year, a report by the UK Guide Dogs charity found a 54% increase in pedestrian injuries involving ‘quiet’ cars between 2012 and 2013. The report stated that people crossing the street are 40% more likely to be hit by a silent hybrid or EV than by one with a petrol or diesel engine.

As charity manager James White said: “Quiet vehicles put pedestrians at risk outside schools, in residential areas and in our towns and cities. The Government is spending hundreds of millions of pounds to increase the numbers of quiet cars on the roads, and while we support the development of environmentally friendly vehicles, more needs to be done to protect pedestrian safety.”

Terrified by the inevitable ‘Silent Killers!’ headlines, regulatory bodies around the world are now pushing legislation that will require car companies to add noisemakers to their electric vehicles. Incredibly, that’s a true story.

And that, in a nutshell, is the story of electric cars. They’re new, they’re exciting, they’re good for the environment. But they’re also unfamiliar, seen (but, apparently, not heard) with suspicion by the Average Joe Jaywalker, and they’re a paperwork nightmare for regulators.

Ferrari chief executive Sergio Marchionne doesn’t like them. When journalists at the 2016 Geneva Motor Show asked him about the possibility of an all-electric Ferrari, Marchionne harrumphed: “It’s almost an obscene concept! You’d have to shoot me first.” Then again, Ferrari is known for its roaring V12 engines, and its opposite-of-quiet cavallino rampante (prancing horse) logo… so, of course, Marchionne would say that.

Fans of traditional motor vehicles would naturally look at electric models with at least a spark of suspicion. In October 2013, you could hear the unmistakable whispers of schadenfreude when a Tesla Model S electrical vehicle caught fire after hitting debris on a highway in Washington State. Tesla confirmed that the fire had started in the battery pack. Tesla stock fell 6,24% in Nasdaq trading that day, and a further 4% the following day, as YouTube footage of the fire spread across the Internet.

But fear of this new technology isn’t hurting the growing fascination with it. If anything, the market for EVs is getting bigger and bigger, as the tech gets better and better and the prices get less and less expensive. (Note, we didn’t say “cheaper and cheaper”. More on that later.)

Japan, for example, now has more EV recharge points than filling stations. A recent survey by Nissan found fewer than 35 000 petrol stations across the country, compared to more than 40 000 places nationwide where EV owners could plug in and recharge their vehicles. Many, though, belong to private owners.

In May, Norway became the fourth country – after the United States, China and Japan – to hit 100 000 EV sales. The US now has about 450 000 EVs on the road, China is at about 300 000, and Japan at around 150 000.

Worldwide, BMW recently announced that EVs and hybrids made up 2,5% of their sales in April; and government data from the UK showed sales of EVs rising by 120% in the past year, compared to just 2% in traditional car sales.

“Each year, we see thousands more motorists switched on to the capability, performance, and reliability of pure electric motoring,” Edward Jones, electric vehicle manager at Nissan Great Britain, said in a statement. “With current electric vehicle ranges enabling more than 90% of daily driving needs, we believe the UK is at
a tipping point for mass EV adoption.”

Tesla1

But what about South Africa?
In a country where load-shedding is now a national punchline, is there a market for electrical cars? We’re about to find out. Tesla Motors, widely regarded as the world leader in the design and manufacturing of electric cars, announced in April that its latest EV, the Model 3, would soon be sold in India, Brazil, New Zealand… and South Africa.

This is big news. Our local market already has two all-electric cars: the BMW i3 and the Nissan Leaf. This, though, is the first time that an electric-only car company is entering the market. What’s more, the Model 3 is Tesla’s shot at a cheaper, mass-market EV. The starting price of US$35 000 (about R550 000) before incentives, is less than half the cost of Tesla’s previous models. Deliveries will start in 2017, but you can reserve yours by placing a US$1 000 deposit at teslamotors.com.

First, though, here’s what you’ll get for your cool half-million ‘randelas’: the Model 3 can travel up to 346km on a single charge (that’s double the range of the Leaf and the i3), goes from 0 to 95km per hour in under six seconds, and is designed to achieve five-star safety rating. It also has autopilot hardware. It’s sporty, it’s comfortable, it’s attractive, it’s safe and it’s efficient. It is, in summary, the kind of car pretty much anybody would love to drive.

But why, in a country that turned rolling blackouts into a national art form, would any South African want to spend R550 000 on a car that requires electricity? Tesla’s answer is the Powerwall.

Tesla_Powerwall

This compact, wall-mounted home battery stores electricity from solar panels, or when utility rates are low, and can then power your household after sunset. It also protects you from blackouts by serving as an emergency backup electricity supply. For heavy industry and business energy storage, there’s also the scalable Tesla PowerPack, which promises commercial consumers “greater control, efficiency and reliability across the electric grid,” according to the company’s website.

“At the moment we’re seeing the majority of solar going into shopping malls or retail parks where all the energy produced can be used on site,” said Tesla’s new South African head, Evan Rice. “If you could sell some back to the grid it would make (investing in storage) a much more attractive business case and help to leverage private capital.”

But what about the cost?
“Apart from consumers becoming more aware and conscious of their impact on the environment, a feasible and user-friendly car that is cheaper to run than a gasoline car will be an attractive option to the local market,” says Sean Pretorius, chief operating officer at insurance brokers Risk Benefits Solutions.

According to Pretorius, the obvious advantage with EVs is that you save a fortune on fuel. “While South Africa has experienced shortages with its power supply, the country hasn’t faced interruptions in a while, and at this
stage it shouldn’t impact electric car owners’ ability to charge their vehicles,” he said in a statement. “In terms of electricity hikes, these rates still remain lower compared to fuel prices.

“Consumers will, however, have to be mindful of the number of electric vehicle charging stations available, apart from their place of residence,” he adds.

The running costs may also catch you out: Pretorius points out that, unlike a traditional car – which contains various parts that need to be regularly serviced, such as the alternator, clutch, radiator or fuel pump – an electric car requires less attention but more specialised maintenance due to its advanced technology.

“It can be more expensive to maintain or repair the vehicle due to the car’s expensive and specialist battery system,” he says. “This will require the use of specialised mechanics to service the technology of the car.”

Finally, apart from possible insurance implications, another cost to consider is the ticket price. “In the United States, for example, government has provided incentives and tax breaks for those purchasing electric cars,” Pretorius says.

“Currently in South Africa, consumers don’t have the option.” In mid-May, the German cabinet approved new incentives and tax breaks to try to boost demand for EVs, as it attempts to meet its target of putting
a million of them on its roads by the end of the decade. The new plans make electric cars exempt from paying vehicle tax for 10 years, starting retroactively from January 1 this year. Employees who charge their electric cars at work will also pay a reduced tax rate of 25%.

Over and above that, German government ministers have struck a deal with the auto industry to give electric car buyers a €4 000 (R70 750) incentive, with buyers of plug-in hybrids getting a €3 000 premium. The costs, estimated at about €1 billion will be shared equally between the government and the car industry. Other countries in Europe – including the UK, France, the Netherlands and (of course) Norway – already have incentive schemes in place to encourage more consumers to buy electric vehicles.

And while those governments are scheming up ways to pay drivers to buy electric cars, the world’s motor vehicle manufacturers are being hit hard by the costs of producing EVs. Remember Sergio Marchionne? The Ferrari boss and loud-car enthusiast is also the CEO of Fiat Chrysler Automobiles… and he really, really doesn’t want you to buy his Fiat 500e all-electric urban runaround.

“If you are considering buying a 500e, I hope you don’t buy it, because every time I sell one it costs me US$14 000,” he said recently.

As you’d expect with new technology, production costs for EVs like the Fiat 500e are still high. The car is sold for US$32 300 before incentives, but it’s currently only for sale in California, where the state is pushing a zero-carbon-emission mandate.

So why is everyone excited?
If electrical cars are so expensive to manufacture, and if their market growth is being driven primarily by whopping great government subsidies and incentives, why would a smart man like Tesla Motors founder Elon Musk want to bet so heavily on their future success?

On one hand, traditional cars are destroying the environment. The situation is so dire – and the regulations around carbon emissions are now so strict – that reputable car makers Volkswagen and Mitsubishi have both recently been caught lying about their own vehicles’ emission numbers.

On the other hand, electrical cars are becoming increasingly cheaper to make. Battery prices are fast heading below the US$150 per kilowatt-hour threshold, which is the point at which experts believe EVs will enter the mass market.

“EVs may be able to compete directly with petrol-driven cars on cost a lot sooner than most people think,” scientists Björn Nykvist and Måns Nilsson recently wrote in a study on falling battery prices published in Nature Climate Change.

Energy analysts Bloomberg New Energy Finance believe that EV battery prices are “on a trajectory to make unsubsidised electric vehicles as affordable as their gasoline counterparts in the next six years”, and that, they predict, “will be the start of a real mass-market lift-off for electric cars.”

The battery issue is key. Electrical cars – like smartphones – are partially about the tech but mostly about the battery and the processing power. And, like the iPhones and Samsung Galaxys that rewrote the rules of telephone technology, electric cars are largely driving their own development and infrastructure.

For the moment, at least, electric cars remain the stuff of the future. But there will come a time when EVs make up one in every three new car sales. And Bloomberg New Energy Finance believes that day will come in the year 2040.

There will come a time when all vehicle manufacturers have at least one electric option in their range. That day
isn’t far off. Tesla, of course, has the Model 3. Chevrolet has the Spark EV. Volkswagen has an e-Golf. Ford has the Focus Electric, Honda the Clarity, Kia the Soul, Mitsubishi the i-MiEV, Nissan the Leaf and Toyota the Mirai. Fiat has the 500e, but you’d be doing them a favour if you didn’t phone the dealership in California and place an order.

And there may even come a time when Ferrari sticks a battery pack in one of its cars, and whispers it at top speed around a race track. Obscene? Anything’s possible.

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