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Uptake of electric vehicles in Namibia will remain slow

Uptake of electric vehicles in Namibia will remain slow

By Theo Klein
Simonis Storm Securities Economist.

At the 26th Conference of the Parties (COP26) gathering in November 2021, 30 national governments and 11 automakers (Ford, Mercedes-Benz, General Motors and Volvo amongst others) pledged to completely phase out the manufacturing and selling of petrol- and diesel-powered vehicles by 2035 in leading markets and 2040 worldwide.

However, automakers such as Volkswagen, Toyota and the Hyundai-Kia and Nissan-Renault alliances did not partake in the pledge. Also, the governments of the US, China and Japan include some of the largest automotive manufacturing countries who abstained from this pledge. In January 2022, Toyota announced plans to invest US $3.4 billion in the US until 2030 to establish a new company and build its first American battery plant as part of their Electric Vehicle (EV) supply chain.

Should more countries have a change of heart and make similar pledges and the rest stay true to their promise, Namibia will have a significant challenge in sourcing petrol- and diesel-powered vehicles in future. Namibia is a net importer of passenger and commercial vehicles and accounts for a minute share of global vehicle sales.

Making the local market vulnerable to the extinction of petrol and diesel cars in the medium-term. If these pledges are honoured, Namibians will have to endure a lifestyle change and adopt EVs on a grand scale.

Some concerns for EVs in Namibia are a lack of charging station infrastructure and a lack of electricity connections in certain remote areas. Another would be the range of batteries. The average distance between popular towns is about 280km and fully charged batteries provide an average distance of 400km (provided you drive on average 120km/h).

While the range of batteries has increased in recent years, there remains “range anxiety” amongst consumers who want to travel far distances. Implying that Evs might primarily be used as city cars and not for inter-regional travel in Namibia.

EV prices in South Africa average N$1.9 million (ranging from N$914,000 to N$3.3 million) for a variety of brands such as BMW, Volvo, Audi and Jaguar. Hybrids (which have both a battery and combustion engine) are more affordable, but still significantly more expensive than their combustion engine counterparts.

Hybrids average N$460,000 in South Africa and ranges between N$349,000 and N$577,800 for brands such as Toyota and Honda. A more affordable option exists for environmentally conscious consumers and has seen growing interest from local customers. Electric Vehicles Namibia CC offers second-hand Nissan Leaf vehicles, typically costing between N$175,000 and N$210,000 with an average mileage on the clock ranging between 30,000 and 80,000 kilometres.

These cars have been tested on gravel roads in Namibia and performed well, disclaiming critics who argue that they cannot drive on gravel roads. They can drive about 100km on a fully charged battery, which would make them more ideal to have as a city car. A full charge on a normal 3-pin 15amp household wall socket takes about six hours. Local insurance companies do provide cover on these cars, which was not always the case.

International accounting standards will make it mandatory for companies to report on their environmental impacts and this might also incentivize businesses to buy EVs used as corporate vehicles made available to staff. To this end, some of the local commercial banks have made provision for EV charging stations in their underground parking lots in Windhoek. This was also part of a strategy to improve the green rating of their buildings. Making it more convenient for bank clients and staff to charge their vehicles (currently free of charge), but also to charge corporate EVs made available to staff.

One EV charging station was launched at Grove Mall in Windhoek at the end of January 2022, using the solar energy from panels installed on the mall’s rooftop to power the charging station. A full charge can take about 30 minutes on average. Grove mall customers may use this charging station free of charge for the next twelve months.

Also, BMW has one EV charging station on their premises in Windhoek that is available for client use at the expense of the dealership. We are aware of a potential joint venture with a South African company to establish charging station infrastructure in Namibia, which will have central billing for EVs (regardless of brand) when registered to charge their EV at strategic points in Namibia.

The local company wishes to remain anonymous, but the project is expected to commence from 2Q2022. We also know of a local investor who is planning on erecting charging stations along the Windhoek – Oshakati and Windhoek – Swakopmund routes.

On to the actual benefit of driving EVs, we compare the cost of refuelling a petrol tank to recharging an EV. We assume the average city dweller drives 880km per month in Windhoek and calculate that monthly petrol costs amount to N$1,276 for a petrol-powered car compared to N$894 for an EV.

Driving with an EV saves you N$382 (70% of the petrol engine cost) per month. This equates to annual savings of N$4,584 from driving an EV daily within the city. To drive the same distance, petrol prices will have to reduce to N$11.18 per litre to bring the monthly refuelling cost in line with recharging an EV’s battery.


 

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