FIFI PETERS: Fully electric cars may seem like a far-fetched dream for most South Africans, especially when you think about load shedding and your car getting stuck because you don’t have power to charge it. But the future is electric, and the cars of the future won’t look like the ones that we are driving today, because of the push to reduce pollution into the atmosphere. This is why the recent changes by government in our energy market and at our ports is so important for South Africa’s electric-car ambitions
Paul Boynton, the CEO of Old Mutual Alternative Investments, now joins us for more on this conversation. Paul, thanks so much for joining the show. Just explain to us why exactly the transformation of our power and perhaps our ports is so important for South Africa’s electric-car ambitions.
PAUL BOYNTON: Fifi, thanks for having me on your show, and hi to your listeners. I think what’s driving the electric-vehicle transition globally is obviously the greenhouse-gas emissions implicit from the ordinary cars we are driving, which are petrol- or diesel-driven.
Transport as a sector globally is responsible for around 15% of carbon emissions. There are about 50 billion tonnes of carbon going into the atmosphere every year at the moment. In terms of the global agenda we need to reduce that 50 billion to zero by 2050. It’s a massive task. And if we are able to achieve that, then we meet the Paris objective of containing global warming to 1.5 degrees Celsius from pre-industrial time. So ‘let’s move to electric vehicles’ I think is part of that agenda.
As you suggested, in South Africa it’s nascent, and we haven’t been in here at all yet. But if you look globally, we’re seeing a lot of activity in other markets. You will all have read around Tesla’s rapid growth in terms of market capitalisation compared to the other traditional car manufacturers out there. If you look at a country like Norway, for instance, at the moment more than 50% of cars sold in Norway are electric, pure electric, and another 20%-odd are hybrid.
So traditional cars that we buy here in South Africa today largely make up only 30% of what is being sold in Norway at the moment. Even in Germany electric vehicles are 10% of the market there today.
FIFI PETERS: Just to add, perhaps, to what you are saying, and the fact that our electric-car market is really nascent, we have to catch up, and catch up quickly, given that the countries that we supply have made pronouncements on the kind of costs that they’ll be accepting in their markets, and it’s not the kind of cost that we’re giving to them today.
So my question to you is: how quickly do you think investments into the sector will start trickling in as a result of the recent pronouncements on energy regulation and on port efficiency?
PAUL BOYNTON: I think these issues are connected to some extent. So the ability for businesses now to embark on sort of embedded power generation, where they can build renewable power or power facilities up to a hundred megawatts and …… [4:15] through the grid, and in essence provide their own power source, I think is a great for two reasons.
The one clearly is that we’ve got a challenging electricity-generation situation at the moment with Eskom under pressure. Some of the big industrial off-takers are able to create self-provision and that is useful for all of us; it improves the reliability of the balance of the grid. Obviously for something like a mine – and a lot of the activities that we’ve seen coming about because of this have been out of places like the mining sector – mission-critical power that is continuously available if you’ve got folk on the ground and a 24/7 operation is very important.
The other big issue for us as a country is that, with this climate issue on the agenda we are going to see, in my view, an increasing focus from the developed world on the carbon footprint of everything. So if you supply a car into Europe in the future, I predict that the carbon footprint implicit in the production of that car is going to become an issue for governments in Europe and potentially certainly for consumers in Europe. People will increasingly be assessing what they’re spending money on based on the concomitant impact on the environment.
So I think it is important for us in South Africa to be looking at what our energy mix looks like. If you look, for instance, Amazon has made a commitment globally to be carbon-neutral by 2030; it might be 2025. In South Africa they’ve looked to procure renewable energy for their energy footprint in South Africa. You’ve seen big corporates globally making these commitments, as well, to become carbon-neutral over different time horizons.
FIFI PETERS: Just briefly, where does South Africa presently play in the global electric-car value chain?
PAUL BOYNTON: As you mentioned, 60%-odd of our car production is exported, and I think we should be looking at this as an opportunity rather than a threat. Obviously the motor industry here has been developed by very, I guess, shrewd government incentives and partnering with the industry over time. But if government moves resolutely on this issue, then I think we can create a space for ourselves in the electric-vehicle value chains of the future.
The other thing we should keep in mind is that the African Continental Free Trade Agreement, which is trying to make Africa more joined up from a trade point of view, is also a big opportunity for us, and looking to Africa as a future market, as well, for things like cars.
Certainly we’re seeing a bit of competition for us, which is maybe a good thing, But Nigeria is trying to develop its car market. Rwanda has recently cut a deal with VW to start assembling electric vehicles in their country. So I think this is something we should be focusing on, given the car industry is about 7% of GDP, and it’s a big contributor to our economy, it’s a big employer directly and indirectly.
We’ve done a good job. Our cars are rated globally. So I think this is an opportunity for us to move into a new space, convincing them here to be a leader. But we do need to move because we’re behind the curve a bit in a sense with our own market. Countries have all developed electric vehicles in their home markets by providing tax incentives to get the industry going in respect of emissions. So I think that’s something government here needs to consider as well.
FIFI PETERS: Sure. I like your pun there, which was probably unintended, that we do need to move if we’re going to seize this opportunity that has been presented by these changes, Paul.
We’ll have to leave it there for now. Paul Boynton, the CEO of Old Mutual Alternative Investments.