Feasibility Study of Electric Vehicle Car

Hire in South Africa

1
This study intends to provides resources, expertise, and
objective information so South Africans can make
confident, informed energy decisions.

Mission Statement:
Advance innovative energy solutions in ways that improve South Africa’s environment and economy.

Vision Statement:
Serve as a catalyst – advancing energy innovation, technology, and investment; transforming South
Africa’s economy; and empowering people to choose clean and efficient energy as part of their
everyday lives.

2
Feasibility Study of Smart Electric Vehicle Car Hire
in South Africa
Summary Report

Prepared for:
Africars Rentals (Pty) Ltd

Prepared by:
TGM Transport Economist
This report was prepared by TGM Transport Economist in the course of performing the work opinions
expressed in this study do not necessarily reflect those of Africars Rentals (Pty) Ltd (hereafter
“Africars”). The reference to any specific product, service, process, or method does not constitute an
implied or expressed recommendation or endorsement of it. Further, Africars makes no warranties or
representations, expressed or implied, as to the fitness for particular purpose or merchantability of any
product, apparatus, or service, or the usefulness, completeness, or accuracy of any processes, methods,
or other information contained, described, disclosed, or referred to in this study. Africars makes no
representation that the use of any product, apparatus, process, method, or other information will infringe
privately owned rights and will assume no liability for any loss, injury, or damage resulting from, or
occurring in connection with, the use of information contained, described, disclosed, or referred to in
this study.

Africars make every effort to furnish accurate information about copyright owners and related matters
in the study we publish. Authors are responsible for satisfying and determining other use of restrictions
concerning the content of the study, and should follow Africars policies and state law. If you are or
believe to be a copyright owner and learn that Africars study has not properly attributed your work to
you or permission was not issued for reference of your work, please email info@africarsrentals.co.za

Information presented in this document, such as web page addresses, are current at the time of
publication.
Disclaimer

This document has been prepared for the titled project or named part thereof and should not be relied
upon or used for any other project without an independent check being carried out as to its suitability
and prior written authority of TGM Transport Economist being obtained. TGM Transport Economist
accepts no liability or responsibility for the consequence of this document being used for a purpose
other than the purposes for which it was commissioned. TGM Transport Economist accepts no liability
or responsibility for this document to any party other than the person by whom it was commissioned.

To the extent that this study is based on information supplied by other parties, TGM Transport
Economist accepts no liability for any damage or loss suffered by the client stemming from any
conclusions based on data provided and used by parties other than TGM Transport Economist in
preparing this study.

Note that the electric car hire opportunities and priorities in this feasibility study are from the market
analysis and industry insight, and may not represent the priorities of other industry stakeholders or
consumers.

Abstract

A feasibility study of electric vehicles (EV) car hire identified and commercial barriers that in the South
African market and provide recommendations for implementing electric vehicle car hire model for
South Africa. Various business models that could be implemented in South Africa were assessed, with
a focus on connecting providers and customers and continuing the board adoption of EVs and the
provision of supporting on-going regulatory reform. Among the recommendations included are short-
term of demonstrating operations with other smart distributed energy resources, supporting applications
that connect providers and customers, continuing efforts to broaden electric vehicle adoption, and a
continuous on-going regulatory reform that will support market-based EV charging infrastructure
development in the in chosen market. The study also probes at the development of smart grid EV
deployment heat maps to provide an outlook of electric vehicle car hire opportunities presented.
Furthermore, medium and long-term opportunities are also discussed in this feasibility study document.

Keywords

Africars Rentals (Africars), Electric vehicle (EV) Electric Grid, Distributed Energy Resources, Smart
Grid, Modernize Electric Vehicles, Car Hire, Modernize Electric Grid
Table of Contents
INTRODUCTION............................................................................................................................................... 1
BACKGROUND ................................................................................................................................................ 2
THE ROAD TO ELECTRIC VEHICLES IN SOUTH AFRICA ...................................................................................... 4
THE BUSINESS MODEL OF ELECTRIC VEHICLES (EVS)........................................................................................ 4
CUSTOMER SEGMENT ....................................................................................................................................... 4
CUSTOMER RELATIONSHIPS ................................................................................................................................ 5
KEY PARTNERS ................................................................................................................................................ 5
COST STRUCTURE ............................................................................................................................................ 6
KEY RESOURCES .............................................................................................................................................. 6
DISTRIBUTION CHANNELS .................................................................................................................................. 6
REVENUE STREAM ........................................................................................................................................... 6
KEY ACTIVITIES ................................................................................................................................................ 6
VALUE PROPOSITION ........................................................................................................................................ 7
BUSINESS MODEL SENSITIVITY ............................................................................................................................ 7
LEGISLATION FOR ELECTRIC VEHICLES ............................................................................................................. 8
HOMOLOGATION ............................................................................................................................................. 8
INCENTIVES .................................................................................................................................................... 9
POLITICAL WILL ............................................................................................................................................... 9
ATTITUDES TOWARDS ELECTRIC VEHICLES .................................................................................................... 10
SUCCESS STORIES .......................................................................................................................................... 11
FINDINGS ...................................................................................................................................................... 12
THE STRATEGIC DRIVERS FOR EV CONSIDERATION ARE SOUND.................................................................................. 12
The environmental benefit. ................................................................................................................... 12
Leadership role of the State. ................................................................................................................. 12
Operating cost savings.......................................................................................................................... 12
SUITABLE VEHICLES ARE AVAILABLE .................................................................................................................... 13
ELECTRIC VEHICLE SUPPLIER SUPPORT EXISTS ........................................................................................................ 13
POLICIES AND INTERNAL COMMITMENTS CAN BE STRENGTHENED ............................................................................... 14
CHARGING INFRASTRUCTURE IS NEEDED BUT IMPLEMENTATION CAN BE STAGED ............................................................ 15
RECOMMENDATIONS.................................................................................................................................... 16
REFERENCES .................................................................................................................................................. 17
Introduction

The goal of this study was to identify electric vehicle car hire and opportunities in South
Africa. The study identified commercial and technical barriers that exist for electric vehicle
car hire pathways for implementation that will be generically applicable in South Africa. The
document also reviews a detailed avenue for supporting and growing electric vehicle (EV)
car hire in South Africa.

The EV industry internationally is growing faster than anyone anticipated. South Africa is still
behind this wave of new technology. Using the analogy – catching the wave before we ride it,
we need to work hard at the very least to ride on the EV wave. To become innovators and
leaders in the EV space, we need to move ahead of the wave to. Such a milestone is achievable
as South Africa in many ways led the world in Battery research, with the core technology on
lithium mainly being developed at the CSIR.

The electric mobility wave will require extensive investment by South Africa with special
efforts by the industry and especially the national government and municipalities. South Africa
will have to encourage and support the growth of the EV industry, this means creating EV-
friendly tax laws, options for policy frameworks and regulatory change, advancing user
interfacing, and engaging electric vehicle supply equipment (EVSE) solution providers for
advanced technology demonstrations and incentives. Furthermore, an urge of encouraging or
incentivising local innovations and local technology development needs to be prioritized. South
Africa environment will have to be an enabler in a sense that its easy for people to buy, own
and be an operator of an EV, electric mobility is the future of the transport industry. Adoption
of this electric wave can be debated, however failure to act and adopt will only distress South
Africa on economic growth and meeting its global commitment of emissions reduction.

South Africa has already taken efforts of introducing EV with the development of an EV
Roadmap that takes a positive stance towards supporting the EV industry. This development
comes at a time when the government is also in attempts to introduce a diversified energy mix
composed by renewable energy. The introduction of electric car hire is in line with government
priorities of reducing greenhouse gas emissions that have continued to pose a threat on the

1
environment both domestically and globally. It therefore cannot be ignored that electric car
hire will not only help curb greenhouse gas emissions but will also create comfort to the end
users, sustainable mobility and smart cities.

Electric and low emission vehicles present an opportunity to significantly lower greenhouse
gas emissions from fleet operations. Africars seeks to investigate the opportunities for EV car
hire in South Africa. This study investigates the feasibility of introducing electric vehicles into
the South African car hire industry considering the currents needs of the market, and the latest
information available on the EV industry, to inform car hire operators.

Background

South Africa ranks among the top 12 largest carbon dioxide (CO2) emitters globally.
Greenhouse gas emissions in South Africa are mainly composed of the industrial sector,
shadowed closely by the transport sector and by residential. These emissions by the latter are
mostly in the urban areas in South Africa. The major energy consumed in the urban spaces is
electricity which is predominantly for heating, lighting, cooking, petrol and diesel that’s mostly
used for transport. Petrol is used almost exclusively for private passenger travel whilst diesel
is used for freight and passenger transport, as well as for industrial and manufacturing
applications – stationary combustion e.g. generators.

The mobility sector in South Africa is made up of passenger and commercial/ industrial
transport, which constitutes 60-70% of the total energy consumptions in the urban landscape.
As a dominant sector it is heavily reliant on fuel energy for its operations thus contributing
significantly to greenhouse gas emissions in urban spaces. South African cities are among the
least dense cities in the world, resulting in substantial reliance on transport fuels to ensure
mobility of people and freight country wide. Cities remain burdened by domestic combustion
of transport fuels that directly impact cities levels of air pollution.

On the other hand, residential, commercial and industrial are duly reliant on electricity as their
energy source which accounts for a smaller share of energy use however the CO2 emissions
share has a larger proportion of greenhouse gas emissions than that of the transport sector. The
transport sector accounts for approximately 30-40% of greenhouse gas emissions in the urban

2
areas while industrial accounts for about 25%, whilst residential accounts for about 20%, and
commercial for about 12%. The result of excessive greenhouse gas emissions by the industrial,
residential and commercial is a result of high CO2 emissions per unit of energy consumed for
electricity compared to liquid fuels as electricity is generated from coal power stations using
low grade coal.

Avergae Urban Energy Consumption by Sector

Government Losses
Residential 1% 5%
11%

Commercial Transport
6% Industrial
Agriculture
0% Commercial
Transport
62% Residential
Government
Industrial Agriculture
15%
Losses

Figure A: Average Urban Consumption by Sector

3
The Road to Electric Vehicles in South Africa

It is no secret that the dawn of electric vehicles (EV) is an advancement of the fourth
industrialization

Although electric vehicles have been in use as far back as the late 1800s and was ironically
more popular than gasoline vehicles for simply being quieter, easier to drive and not emitting
pollutants. During that time its popularity shun down following the mass production of the
Ford model T, which made petrol vehicles more affordable. Fast forward to today and the
outlook of the electric vehicle market is being reinvigorated by energy security concerns and
global climate change pressures.

Domestically, the South African EV market is still in its infancy, however it is expected to
grow at a gradual but steady pace over the next several years. In terms of manufacturing the
South Africa’s automotive sector is presently ranked 23rd and regarded as a key role player in
the global automotive value chain. No market is perfect and this can be seen with the EV market
in South Africa, which is currently restrained due to a variety of factors which include
unfavourable EV policy and a lack of infrastructure. With a strong foundation of International
Original Equipment Manufacturers (OEMs) having a presence in the country and sound
investments in an attempt to grow the market locally. Their global strategies are slowly filtering
down into the domestic South African market, with presence of about 20 battery electric
vehicle (BEV) and plugin hybrid electric vehicle (PHEV) offerings currently available. As
more OEMs continue to introduce their EVs to the South African market, the country is
expected to see an increase of BEV and PHEV over the next few years. Electric vehicles are
no good without charging infrastructure. Currently, the charging infrastructure is lacking, but
is set to grow as more initiatives and technology necessitates further uptake of EVs in the
country. The introduction of EVs will result in sustainable and domestic sourcing of transport
fuel and a better alternative as various cities are looking at EV for public transport solutions.

The Business Model of Electric Vehicles (EVs)

Customer Segment

There are two principal customer segments for the all-electric car leasing chain; businesses,
like car rental companies, carsharing companies, providers of company cars etc., and private
households. Africars Rentals is primarily interested in the first step of the chain, particularly
on the car rental aspect of the business. Africars believes by using all-electric and hybrid cars
the company will enhance their image as an environmentally friendly company. With this
business model Africars can do this without sacrificing profitability and by using the same
terms as for internal combustion engine (ICE) cars. Offering all-electric and hybrid cars might

4
also attract the segment of consumers who wants to try new technology without having to make
a commitment.

Although some of the private households are interested in leasing a new car, it is the latter steps
of the leasing chain that most of them find interesting. Used car leasers are preferably car
commuters with more than one car in their household, who normally buy used cars, and
preferably commute 20.000 km or more per year. Advantages that private households can get
from leasing an all-electric and hybrid car are that the monthly cost of the car is fixed and
known, also for a used car, they don’t have to sell the car or take any financial risk and they
are relieved from the curse of car ownership. By leasing a used all-electric or hybrid car, the
household can contribute to the future of the environment by reducing emission which will
ensure a sustainable future for their kids and this is achievable at a lower cost as for a
corresponding ICE car.

Africars targeted customer segment are insurance companies and private individuals with
insurance car cover. Africars has identified this market as prospect market which will save
insurance companies costs when it concerns replacement vehicles for their clients. This
positioning will allow Africars to offer insurance companies a more better solution with its
range of all electric and hybrid cars as replacement vehicles for the duration in which the
insured vehicle is unavailable. The insured will be guaranteed an eco-friendly vehicle that is
environmentally green and help insured contribute in the reduction of carbon footprint.

Customer Relationships

The customer relations are the same as for leasing companies today. It is possible that the leasing
company doesn’t have any previous relations with the private customer segment interested
in used-car operational lease, since that seems to be an unexploited market, but that shouldn’t
be too much of an issue given the Africars close relation to the car OEM and related sales
organizations.

Key Partners

The identified key partners are car manufacturer and car dealer who want to use this channel as a
means for faster commercialization of their electric and hybrid cars constitutes as a key
partner in this business model.

5
Cost Structure

Typically, the cost sources will be the same as for traditional operational lease, but the structure
of the costs will be different, i.e. different amount per source than for operational lease of ICE
cars.
The main costs will come from car purchases, car maintenance, insurance and other services
that Africars is prepared to include in the operational lease offer.

Key Resources

Car leasing business model are the same as for other car leasing companies. Possibly a database
for statistics on for example battery use and status could complement the key resources.

Distribution Channels

The cars and any other possible parts of the value proposition are distributed through the same
channels as leasing companies use today. Africars will use the existing channels that OEMs
have created or established for the distribution of electric and hybrid cars and associated parts.

Revenue Stream

The main revenue will come from leasing contracts. An additional revenue stream may be
possible from selling battery data and possibly from using the car as an advertisement platform,
but these additional revenues are not included in the calculations made for this business model.

Key Activities

Key activities for the leasing company are primarily the same as today. There may however be
an additional value in collecting a battery, use, and charging statistics for key partners to use
in the learning process for this relatively novel technology application. The value of that
information is currently unknown and treated as “a bonus”.

Smart charging network providers are essential to the success of electric and hybrid vehicles.
Big corporates such as Shell intend to roll out electric vehicle charging stations in their retails
network in support of the revolution of EV and its commitments of reducing carbon emissions.
According to W. Jordaan from GridCars, there will about 200 charging stations installed by
the end of March 2019. The latter gives Africars confidence and warranty that enough business
support will be available as the company plays a key role in making their customers’ journeys
better.

6
Value Proposition

The value proposition of this business model is compared with leasing of an ICE car on a per-
km basis since the financial lease cost will be higher. However, together with running costs,
the total cost of the all-electric car becomes much more comparable, even lower.

A new car can be leased by car rental companies, carsharing companies and other new-car
lease customers at about the same price and on the same terms as comparable new ICE cars –
when comparing the total mileage cost.

A second, third and possibly fourth rental scheme is then designed for the private household
customer segment. The older the car, the more economical is the all-electric car compared to a
corresponding ICE car. After three to five leasing sequences, the car is 8 years old; its
economical residual value is estimated to zero, and typically the battery warranty period ends.
The car and battery may have residual values above zero, which in that case will improve the
case economically.

Business Model Sensitivity

The advantage of the all- electric car leasing chain business model will mainly depend on the
gap in mileage fuel cost, purchase price, and in service and repair costs relative to ICE cars.

Based on these factors, it is only the purchase price that is currently unfavorable for all-electric

cars. The purchase price for all-electric cars are expected to decrease due to technological

improvements on batteries and this will improve this business model’s competitiveness
relative to ICE car lease. Electric vehicle leasing chain also becomes more and more

competitive for the customer as the car becomes older. This is due to the relatively lower

influence of the higher initial purchase price.

The business case also improves for the customer with a higher annual mileage, which is

because of the lower energy cost for an all-electric car. However, a high annual mileage gives

a higher depreciation since the battery warranty ends after a certain mileage. It is also

important that the fuel price gap remains. The larger the price gap between electricity and

petrol/diesel is - the better it is for this business model. Although, ICE cars are expected to

become more and more fuel efficient, not least in Europe because of EU’s ambitions on

reducing CO2 emissions from cars. This is a potential threat to the viability of the business

model.

7
Improvements in battery technology might make it difficult for the leasing company to set the

residual values within the leasing chain exactly at the optimal levels. However, if the business

is viewed from above, battery technology improvement will also lead to decreasing prices on

new all-electric cars relatively to ICE cars. So even if the profitability of one specific all-electric

car will go down, the profitability of another, newer all-electric car will go up.

Legislation for Electric Vehicles

Homologation

Homologation is a process of approving or certifying a product to specify that regulatory

standards and specifications are met, such as technical and safety requirements. For instance,
in the automotive industry vehicles undergo a process of testing in order to allow it to be driven
on public roads. While this is a costly and quite complex process, it is deemed to be very
necessary. This process warrants that your expectations for safety and health are met in every
vehicle you buy in the market. Essentially, this also ensures that the right to be in a safe
environment when you drive on public roads is respected. As a driver you expect that, when
driving on a public road, other vehicles undergone proper tests, and therefore are assured that
the vehicle you use and other road users are using legal vehicles within suitable restriction of
the law. The homologation legislation in respect to electric vehicles in South Africa is well
comprehended and well-defined, it conforms within relative internationally rules and these
have been successfully applied to various EVs in South Africa. The process can be lengthy,
but this is for good motives.

On the other hand, one may ask, why are EVs not widely adopted in our transport system? The
slow pace at which electric vehicles and their technologies are introduced in South Africa lies
heavily on the lack of incentives to support consumers and lack of political will to demonstrate
the viability of this technology.

8
Incentives

Incentives are where we make compromises (NOT safety related compromises) to our laws
and by-laws to make a more conducive environment for electric vehicles. In respect to South
Africa, it is well behind other leading EV consuming countries.

Concerning EVs we have no financial incentives, no tax rebates, and no subsidies (other than
those offered by the vehicle manufacturers). In a nutshell, there is very little to none motives
to encourage people to buy in into EVs today, and the only growth we see is organic, based on
the advantage to driving an electric car, i.e. lower energy bill and the thrill of driving a vehicle
with 100% torque at zero rpm. It is quite important to note that municipal and provincial
incentives can also play a vital role, like offering free parking for EVs, no toll fees, installing
charging infrastructure, and the use of dedicated lanes or sharing existing bus lanes etc.

Political Will

South Africa is hampered by a lack political will. It is unclear as to why the South African
government is not proactively promoting EV’s in every way they can to lower the barrier to
entry. There is an outcry for government to build a strong foundation, which will enable a
leverage of the upcoming economic development opportunities. The initiative will involve
engagements with leading industrialists in the space, bringing together sound thought leaders
to ensure that South Africa is well positioned to exploit this technology whilst we still have the
window of opportunity to eventually move with the EV phenomena. South Africa needs to
create a robust supply and demand relationship that stimulates and fosters innovation in the EV
space, in turn will improve South Africa’s economic value, create growth for jobs and wealth.
Furthermore, promotion to use local products, service and technology will have to be
stimulated in order to give South Africa a chance to compete globally. Lastly, it has to be
stressed that South Africa has without a doubt a world class legislative framework. That is
quite encouraging as we just need to up our game and sincerely support the consumption of
EVs by introducing attractive and effective industry incentives. Sound leadership from the
government, from national level through to the municipal level, is mandatory for South Africa
to grow a successful EV industry. Government and municipalities will have to take the lead to
or support initiatives that drive the EV programme.

9
Attitudes towards Electric Vehicles

Current South African respondents’ attitudes towards EVs in the indicative regions is largely
positive with 81% of survey respondents wishing to see more EVs in their respective
municipal’s fleets; and only 8% of survey respondents not interested in driving one (Figure
B).

Yes - work vehicle

6%
Yes - test drive
14%
Yes - personal
vehicle
3%

No - not interested
8%

No - but I would
like to try one
69%

Figure B: Survey Responses to “Have you driven an EV?”

Out of all survey respondents, the most common responses to the questions:
“What circumstances would need to exist for EVs to make sense for your fleet?” were:
¨ More vehicle choices available”
¨ More recharge stations available in the area”
¨ Financial business case”.

Out of all survey respondents, the most common responses to the questions:
“What do you see as the biggest barriers to introducing more EVs into your fleet?” were:
¨ Range anxiety, availability of recharge infrastructure
¨ Range anxiety, length of trips exceeding battery charge
¨ Price of the vehicle
¨ Types of vehicles available”.

10
Out of all survey respondents, the most common responses to the questions:
“What are the main reasons you want to see more EVs in your fleet?” were:
¨ To aid in meeting greenhouse gas emission reduction targets
¨ It is a good image for the State to be portraying eco-friendly mobility
¨ reduced operating costs”.

The most prevalent respondents to the survey were from the Environment/ Sustainability
perspective of the various regions. The respondents saw the biggest barriers to introducing EVs
as a range anxiety and purchase price of the vehicle. The respondents also saw the main reason
for procuring more EVs was that it is a good image for the state and general public to portray
and to aid in meeting greenhouse gas emission reduction targets. The next most prevalent
respondents to the survey were from the Fleet/ Infrastructure sector of the various regions. The
respondents saw the biggest barriers to introducing EVs as a range anxiety, types of vehicles
available and new technology (reluctance to change). These respondents saw the main reason
for procuring more EVs was to aid in greenhouse gas emission reduction targets, reduced
operating costs and that it is a good image for our society to be portraying – promoting eco-
friendly mobility and sustainability.

Success Stories

In an era of “new-mobility”, GREENCAB is now poised to leap-frog into the future through
the expressed intent of establishing a fully-fledged Cab Division operating primarily Electric
Vehicles on an E-hailing App. It will do so by awarding formal social franchise opportunities
to both existing metered taxi operators, as well as emerging operators with a particular
preference for youth and women entrepreneurs. It is actively pursuing a favourable long-term
financing deal in conjunction with the SA Franchise Warehouse and the Jobs Fund to over-
come price as the primary barrier to entry of the adoption of electric cars as cabs (see logos
below). Through its Electro-Driver Incubation Programme new entrants into the Cab industry
would receive training in electro mobility as well as in how to become tech-savvy in an industry
that is increasingly “on-demand”. The Franchisee Ignition Programme will further afford both
parties the opportunity to “test-drive” the other to ensure the best fit in terms of value alignment
and qualities such as whether the prospective franchisee is a sufficiently fueled by a desire to

11
fulfil their dreams. As transport is where the rubber hits the road in cities, both in terms of
congestion and pollution, it is also where GREENCAB believes the best inroads can be made
to ensuring a sustainable urban transport future. A future that is de-carbonised and driven by
Electric Vehicles. GREENCAB is promoting the BMWi3 as its flagship vehicle in light of the
fact that it is “green by design” through allowing battery replacement / upgrading – in this way
doing away with designed-obsolescence by replacing the battery and not the vehicle (Electric
Vehicle Industry Association, 2016).

Findings

The key considerations and current fleet operations gave an opportunity of analysis and
presented an urge to the following findings.

The Strategic Drivers for EV Consideration are Sound

The analysis found that the primary reasons for South Africa to considering EVs were
justified.

The environmental benefit. EVs are more energy efficient than conventional vehicles. The
continual improvement in South Africa’s grid emissions intensity will further enhance the
environmental performance of EVs in the long term, with the use of renewables (which all
provinces are investing in) providing a means for zero greenhouse gas emissions. The no
tailpipe emissions in turn results in improved air quality in urban areas and associated
community health benefits.

Leadership role of the State. State representatives as stewards in the community have a
responsibility to provide sound leadership to the public. Incorporating EVs within State fleets
will provide an image of leading by example with a demonstration of their use, which will
create a demand for OEMs to release more EVs, and ultimately feed the second-hand vehicle
market, rendering EVs more accessible to society at large.

Operating cost savings. The higher energy conversion of the electric motor, and less moving
parts result in substantial savings in annual vehicle operating costs (i.e. fuel and

12
maintenance). For the business case, these need to be considered and balanced against the
higher purchase price and the cost of associated infrastructure.

Suitable Vehicles are Available

The majority of EVs available in South Africa are in the below the luxury vehicle segment.
Although, vehicle choice is limited, the analysis found that EVs suitable for South African use
are available.

EVs available below the luxury vehicle threshold include: Nissan Leaf PHEV, Toyota Prius
PHEV, Renault Zoe, Renault Kangoo, Tesla, and BMW i3. Further, Jaguar have the I Pace an
electric vehicle available for a specified month trial program, as a pre-cursor to releasing the
full EV I Pace variants in South Africa.

Stakeholders indicated range anxiety as a barrier to EV adoption, and off-road driving. The
analysis found that the average daily kilometres travelled was 84km/day, which would not
require a recharge during the day; and the Nissan Leaf PHEV and the Toyota Prius PHEV are
suitable vehicles to address user concerns with regional roads. It should be noted that since the
vehicles are PHEV, it will still consume conventional fuel and as such will not have the same
environmental benefit as a fully EV. However, hybrid electric variants have the added benefit
of extended range to alleviate concern and facilitate a transition to EV.

All vehicles introduced into state fleets should be fit for purpose. At this stage it is important
to note that it is not likely that all fleets could be replaced with EVs. Nevertheless, it is feasible
for the electric vehicles to be introduced through the value chain of South African mobility.

Electric Vehicle Supplier Support exists

There is support within Electric Vehicle Industry Association (EVIA), South African National
Energy Development Institute (SANEDI), City of Tshwane, GridCars, Department of Trade
and Industry (DTI), Department of Energy, Department of Transport, Department of
Environmental Affairs, Department of Science and Technology, Council for Scientific and
Industrial Research, BMW Group SA, Technology Innovation Agency, Nissan South Africa

13
and other municipalities for participation of introducing EVs into their municipal fleets. There
is also support from the EV market to encourage EV growth in the regions, and the analysis
found that opportunities exist for further collaboration with manufacturers and infrastructure
providers for mutually beneficial outcomes through EV trials. As OEMs are trying to prove
their products to the market, Africars wish for continuous R&D to learn more to promote EVs
into the South African society. As such, it is an opportune time to collaborate as it will improve
the business case by reducing/ removing the price premium.

Policies and Internal commitments can be strengthened

It is evident from an Environmental perspective all stakeholders place a high value on

environmentally sustainable outcomes; whether it is municipal-specific operations, community
lifestyle or a holistic approach. The emphasis put on transport opportunities varies between
stakeholder to stakeholder.

It is fair to outline that an opportunity exists for different stakeholders to identify specific
targets for municipals and community fleets in relation to emission reduction (number of EVs,
maximum utilisation, alternate transport) and energy reduction (renewable energy to assist with
charging infrastructure) in their Environmental Strategies.

A strong urge for stakeholders to have a Fleet Policy where specific details regarding vehicle
procurement and usage will provide a positive advancement to EVs introduction. Some
stakeholders do not have a Fleet Policy. Of the existing Fleet Policies, there was only a few
that required the use of alternative vehicles (i.e. hybrids), with others specifying basic
environmental criteria of the ‘highest’ or a high range rating from the Green Vehicle Guide.

Stakeholder fleet oversights should monitor the utilisation of their vehicles – commuter use,
private and pooled. Assets with a low utilisation rate should be removed, and not replaced.
Policies should not encourage full private vehicle ownership (through novated lease or
otherwise) as a mechanism to reduce fleet size as this only brings economic benefit to the
stakeholder, and neglects environmental impacts.

14
Furthermore, Fleet Policies should incorporate details on monitoring systems like systems that
enable monitoring of utilisation percentage/ rate, maintenance/ replacement levels, an efficient
and secure booking system that ensures accountability that private and commuter cars are
pooled.

Procurement policies vary in their focus and comprehensiveness on environmentally

sustainable procurement (i.e. Green Procurement). Procurement policies should certainly be
generalised to provide principles to guide the procurement of any product or service and ensure
alignment with other Stakeholder policies and strategies. A common barrier to the achievement
of Green Procurement in some of the stakeholders’ policies is a confusion around
‘Sustainability’ and ‘Value for Money’ as guiding principles. There was also confusion around
Best Value and Value for Money.

Procurement Policies should provide a legislation framework in which stakeholders seek to

implement, and that forms the regulatory backbone of the procurement system, as well as any
national strategies and policies (e.g. Fleet Policy). An outline of best practice principles should
be provided, where best practice is determined by a Value for Money assessment, and where
Value for Money encompasses a myriad of considerations embracing sustainability which is
measured by three pillars. Items associated with ethical and fair procurement should be well-
defined (i.e. transparency, competitive thresholds, etc).

Charging Infrastructure is needed but implementation can be staged

In order to accommodate for Electric Vehicles within stakeholder fleets a level-2 charging
station should be installed at various strategic locations where an EV is to be based. It should
be borne in mind that future demand should be considered to minimise the costs of future
installations and/or upgrades for further charging stations.

Installations can be periodic from both a financial and change management perspective, with
chargers installed to accommodate state EV fleets first; and public stations second (unless the
installation of public use stations forms part of a PR initiative). The reasoning behind this
approach is that state EV fleets will offer the demonstration, while the installation of public
use charging stations will encourage EV uptake by the South African market.

15
To ensure the most cost effective and strategic placement of charging stations, infrastructure
providers should be asked to respond to an expression of interest to detail their suggested
locations and pricing.

Recommendations

The following recommendations are made:

¨ The feasibility study move to the next stage and a business case is conducted to
determine the potential cost of abatement for introducing EVs under a different range
of scenarios, including considerations surrounding the need for charging infrastructure.
¨ The available EVs are considered by fleets and that the vehicles highlighted for
potential switching to EVs are validated, ensuring fit for purpose selections are made.
¨ Stakeholders without emission reduction targets/ strategies in place investigate
establishing them to ensure the internal framework is established to better facilitate the
business case.
¨ Stakeholders consider participation in the OEM trials.
¨ Stakeholders engage with their local utility providers early.
¨ Stakeholders without existing data management systems consider investing as the only
way to improve performance is to have access to data to monitor it.
¨ Stakeholders should consider the change management advice in Appendix E to engage
with internal and external stakeholders.

16
References

Beeton D. and Meyer G. (2015), Electric Vehicle Business Models: Global Perspectives,
Lectures Notes in Mobility.
Clugston E., 30 October 2018, Renting Electric: How nextmove is Making EVs Accessible,
viewed in March 2019 from https://cleantechnica.com/2018/10/30/renting-electric-how-
nextmove-is-making-evs-accessible/
Department of Environmental Affairs, 2014, Green Cars in South Africa: Leading the drive
towards zero emissions, Your handy Guide.
Electric Vehicles Industry Association 2016, ‘Unity in Sustainable Mobility: Roadmap Towards
Building a Unified Electro Mobility Industry In South Africa’.

McKinsey, Energy Insights Global Perspectives, Summary, 2019, viewed on March 2019 from
https://www.mckinsey.com/~/media/McKinsey/Industries/Oil%20and%20Gas/Our%20Insig
hts/Global%20Energy%20Perspective%202019/McKinsey-Energy-Insights-Global-Energy-
Perspective-2019_Reference-Case-Summary.ashx
Weiller C. and Neely A., Electric Vehicle Rental Services: Project in Okinawa, Japan, Case Study,
viewed on March 2019 from https://www.ifm.eng.cam.ac.uk/uploads/Resources/Okinawa_HQP.pdf

Viktoria, Swedish ICT, All-Electric Car Leasing Chain, viewed on 18 March 2019 from
https://www.viktoria.se/sites/default/files/pub/www.viktoria.se/upload/projects/leasing_chain
_nytext.pdf

17