Tesla’s new Model 3 may finally convince Musk-crazy SA to drink the electric Kool-Aid
He struggled through childhood, was repulsed by the “jockish white Afrikaner culture” at Pretoria Boy’s High and made a run for North America as soon as he matriculated. But South Africa still clings to Elon Musk and it’s easy to understand why.
Folklore about the “real-life Iron Man” speaks of unbridled ambition, an almost other-wordly vision for the future and a leadership style that is at once relentless, unforgiving and motivating.
It’s fitting, then, that he’s the face of Tesla, the motor company founded 13 years ago with the modest mission of “proving electric cars can be better than gasoline-powered cars”. It’s an important facet of Tesla’s broader goal — “to accelerate the world’s transition to sustainable energy”.
With this ethos, the Tesla brand has generated an allure that saw more than 400 000 people ordering its Model 3 two weeks after it was announced.
South Africans went wild with excitement when Musk announced in a tweet: “Adding several more countries to Model 3 order page tonight. Check for details, but will include India, Brazil, SA [South Africa], SK [South Korea], NZ [New Zealand], Sing [Singapore] & Ireland.”
The news was welcomed, particularly because Tesla said in March last year that it had no intention of bringing its cars to our shores.
Even Tesla’s competitors seemed enthusiastic. “We welcome Tesla Model 3,” said Edward Makwana, the manager of group product communications of BMW South Africa. “Tesla has, above all, made a valuable contribution in making electric vehicles emotionally desirable.”
When it finally does arrive, though, Tesla will be trying to establish a limited market alongside two well-established competitors.
The Leaf and i
The Nissan Leaf was the first environmentally friendly car to arrive in South Africa, taking to the roads on November 2013. The Leaf costs about R470 000 and can go for about 195km before its 30kWh lithium-ion battery needs recharging.
“Since launch in 2013, sales have been slow but steady with more than 100 vehicles sold,” said Veralda Schmidt, the spokesperson for Nissan South Africa.
Globally, Leaf sales hit a peak in 2014, with about 61 000 models sold. Last year, that number dropped to 43 661, according to figures provided by Nissan South Africa. Bearing in mind that it is the best-selling electric vehicle in the world and Musk’s 400 000 Model 3 orders become all the more impressive.
On June 1, electrek, a news site tracking the transition from fossil fuel transportation to electric, reported that United States sales for the month of May were down 53.5% from the same period in 2015. Many attribute this to the announcement of the Model 3, and Nissan itself recognises the slump is a result of competition.
“In recent years, more players entered the market and the consumer now has more options to choose from,” Schmidt said.
The BMW i vehicles arrived in South Africa in March last year. At a cost of R525 000 and with a range of about 115km, it is likely to be a direct competitor to the Nissan Leaf. The BMW i8, costing R1.76-million, is high-end and touts itself as “the world’s most successful hybrid sports car”.
Perhaps because of South Africa’s affinity for the BMW brand, its sales locally have outstripped those of the Nissan Leaf. Since their introduction, 130 BMW i3s and 153 BMW i8s have been sold in the country.
With a price tag of about $35 000 (R533 000), the Model 3 will cost more than the Leaf or i3, but its range of 340km is significantly greater. And a longer charge range could be a game-changer.
Although vehicle manufacturers have charging stations installed in the home of every buyer, some would-be buyers hold back because of a “range anxiety linked to a limited charging infrastructure”, said Keba Matlhako, the strategic relations manager of Nissan SA.
Charles Leonard, who drives a Lexus hybrid and previously drove a Toyota Prius, said South Africa’s limited charging-station infrastructure would be a dissuading factor when considering a fully electric vehicle (EV).
But Winstone Jordaan, the founder of GridCars, a locally designed, low-cost electric vehicle, said the fears were unfounded. “I have never known a person who owns an electric car to say, ‘Oh, there’s no charging infrastructure’,” he said.
Jordaan, whose company also supplies charging stations and infrastructure, said the demand for charging stations was increasing rapidly. “GridCars has installed about 40 units in the past two years, but we will do another 40 units in the next two months,” he said. “Strategically, we will possibly have installed as many as 500 units by the end of the year.”
The Industrial Development Corporation offices have four state-of-the-art solar charging stations that can be used for free by the public. Many Nissan and BMW dealerships have charging stations on their premises and BMW has just installed a solar carport at its Midrand head offices. Standard charging stations have been installed at some malls such as Melrose Arch.
Jordaan, who also heads the National Association of Automobile Manufacturers of South Africa’s (Naamsa) electric vehicle technical working group, estimates that eventually 10% of all shopping centres will have charging facilities.
But it’s not as quick as filling up with petrol. A home station typically takes seven or eight hours to fully recharge a battery. A standard public charging station needs four hours to restore 80% of a charge.
A fast charger, which gets a car to 80% in 20 minutes, is available, but this model costs more than 10 times the R20 000 of a standard charger.
Rich man’s car
The GridCar — a no-frills two-seater with a range of 80km, which is intended to be leased on a per-kilometre basis — could be a game-changer in South Africa, allowing people in lower LSMs to enter the EV market for the first time. But it is still in the testing phase (“We are about 98% there on the technology side,” said Jordaan) and it needs another R100-million to go to market. The EV remains a “rich man’s car”, with the price tag pushing it into the luxury category. “I was looking at the Leaf,” Leonard said, “but it’s so damn expensive that the money saved on fuel was going into paying it off monthly.”
Arthur Goldstuck, an information technology commentator and the managing director of World Wide Worx, said in April that the South African mass market was not ready for electric cars. “The charging ecosystem does not exist here in terms of infrastructure as well as mind-set. One of the main reasons the Nissan Leaf and BMW i3 still have low sales levels in this country is that the cost is too high relative to the value delivered.”
Makwana disagreed. “The cost per 100km for the BMW i3 is R15.16. If you compare this with the cost of a highly efficient diesel engine used in city or urban areas, it comes to about R84 per 100km. That means a BMW i3 is five times cheaper to run than an internal combustion engine.”
Greg Ball, who has four Nissan Leafs for his business and family, expects to break even soon. If the kilometres travelled are added together and the savings on maintenance, fuel and past bills to Eskom are considered, “we will be in the black by year five”, Ball said.
What are the costs for producers? In 2013, the department of trade and industry announced that companies that produce 5 000 electric vehicles annually will be reimbursed 35% of their production costs over three years. But neither Nissan nor BMW, which import their EVs, are enjoying these benefits and a 25% import duty is levied on each vehicle.
Stakeholders are lobbying for the government to reduce the 5 000 car threshold. “Why not 500 instead? In fact, why not one?” asked Jordaan.
All highlight the need for institutional support to expand the EV market. “There are no tax rebates for lower emissions and no special concessions for EV drivers, for example, special lanes, parking, or taxes. All these are supporting factors to create a conducive environment for EVs to be successful,” Matlhako said.
Makwana added: “It should not be the responsibility of manufacturers alone to drive [infrastructure].”
According to Jordaan, the quicker these issues are addressed, the quicker EV sales will skyrocket (excuse the pun, Elon). Assuming this transpires, South Africa could follow in the tyre marks of other countries such the Netherlands and India, which have discussed the possibility of ending the production of fossil-fuel cars by about 2020.
“Sometime in the next 10 years, a pivot will take place,” said Jordaan. “And, when that pivot happens, I have no doubt that EVs will be by far the best-selling vehicle in the country.”