By 2025, Toyota SA wants 20% of its sales to be electric vehicles (EVs). A year later, Mercedes-Benz SA (MBSA) is aiming for 50%. Nothing better sums up the challenge facing the local motor industry in trying to wean consumers off the traditional petrol or diesel internal combustion engine (ICE) and get them onto its emission-free alternative.
For while MBSA’s EV offerings will be battery-electric vehicles (BEV) reliant on regular, plug-in recharging, Toyota SA is putting most of its money on hybrid vehicles using two motors — one electric and the other an ICE. On most, known as plain hybrids, the ICE keeps its electric sibling permanently charged without the need for plug-in backup. Some others have a plug-in option.
Globally, Mercedes-Benz, like most brands, has pinned its colours firmly to the BEV mast and a rapid transition from ICE. Toyota has hedged its bets. Outgoing CEO Akio Toyoda, a self-confessed petrolhead, has kept the company’s options open, offering a variety of electric alternatives, as well as hydrogen. These fall under the broader heading of new-energy vehicles (NEV).
Toyota SA president Andrew Kirby said last week that synthetic ICE fuels could also not be ignored. Scientists are working on producing chemically induced, carbon-neutral fuels that would be a direct replacement for petrol and diesel, and require no engine modifications. They could also be stored and distributed through the existing fuel station network.
A global consumer survey by Deloitte, released last week, found that most people considering an EV purchase would reconsider if “an environmentally sustainable, synthetic fuel alternative is available for traditional (ICE) engines”.
Price incentives
Toyoda has questioned publicly if the industry is right to tie its future so comprehensively to electric power. He thinks consumers share his view.
In a recent US interview, he said: “The silent majority are wondering whether EVs are really OK to have as a single option. But they think it’s the trend so they can’t speak out loudly.” He added: “Because the right answer is still unclear, we shouldn’t limit ourselves to just one option.”
That limitation is certainly not suitable for SA, where the absence of consumer price incentives limits the sale of BEVs and plug-in hybrids to an exclusive group of high-earners. Yet there is undoubtedly an appetite for EVs of some kind.
Toyota SA sales and marketing head Leon Theron said on Thursday that when the company launched its locally built Corolla Cross car range in 2021, offering a choice of hybrid or all-petrol engines, it expected hybrids to account for about 12% of demand. In fact, it’s more than 50%.
Sales are nowhere near that level. Theron says the global Toyota supply chain can provide fewer than half the battery packs requested by SA. Add in last year’s Durban floods, which closed Toyota SA’s Durban assembly plant for four months, and Kirby says customers ordering a Corolla Cross hybrid now will wait up to a year for delivery.
For some years, MBSA’s East London assembly plant has included plug-in hybrids among its various C-Class models but these have all been exported and there are no plans to make them available in SA. Now the company is preparing to launch a plain hybrid version of its high-performance AMG variants.
Reduced shifts
Production of all C-Class variants at the plant was cut recently because of a shortage of semiconductor microchips, which run on-board technology. It’s a problem faced by plants worldwide. Though new chip plants are being built, there isn’t enough production to meet demand. In 2020, the shortage cut global vehicle production by more than 10-million units. Last year it was more than 7-million. In 2023, it’s estimated that nearly 3-million planned vehicles will go unbuilt.
Several SA assembly plants have been affected at various times. MBSA joint CEO Andreas Brand confirmed on Friday that East London recently reduced the number of daily shifts because of a chip shortage but said production will return to normal on Monday.
Likewise, Toyota SA’s battery-pack challenge is not unique. Plants everywhere are struggling to source sufficient stock. A global shortage of lithium, a core mineral ingredient in battery technology, isn’t making the situation any easier.
Ravin Sanjith, Deloitte’s Johannesburg-based head of African automotive affairs, believes that if every motor company adheres strictly to declared EV manufacturing plans, “we will run out of batteries by the end of the decade”.
Many developed nations plan to ban the sale of new ICE vehicles — including hybrids — by 2035. Many other countries have no intention of following the helter-skelter trend. Most African states, including SA, have neither the infrastructure nor the consumer income required. Only top-end SA buyers can afford the cost — recently estimated by MBSA joint-CEO Mark Raine at about R180,000 — of solar-power installation and charging equipment required to take them out of Eskom’s incompetent clutches.
Limited grid
Sanjith believes hybrids will be a core part of Africa’s EV transition for years — long after they are phased out elsewhere. “We can’t just copy and paste from Europe, North America and the Far East. We need an African approach to EVs,” he says. “We have unique challenges here, like our energy crisis. The solutions won’t be found elsewhere.”
Kirby says: “For some markets, BEVs are the answer, but for others, like ours, we have to recognise that we can only fully adopt this technology when our infrastructure can support them at scale. We have to recognise that SA is not now geared up to receive many of these technologies on scale. For starters, we have a very limited charging grid, with just 267 charging stations throughout the country. Couple that with the very obvious energy crisis that we are experiencing and you can see why a one-size-fits-all strategy is now not feasible.”
He adds that the carbon dioxide emission reduction of three plain hybrids equals that of one BEV. So if the latter are unaffordable to most consumers, why not encourage the sale of relatively affordable hybrids if the overall benefit to the environment is positive?
The government is due to announce its much-delayed NEV incentive policy next month. Trade, industry & competition minister Ebrahim Patel has hinted that it is leaning towards manufacturing incentives and may not include the consumer price inducements that have helped EV sales flourish in other countries.
Kirby, like others in the industry, thinks these inducements are vital for EV growth. Indeed, when the Corolla Cross hybrid was launched, its price was reduced to take account of duty benefits government was then proposing. Of the likelihood of such benefits being offered in the final policy blueprint, Kirby said: “Unfortunately, we don’t think that will happen.”
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