Mercedes-Benz SA expects an increase in sales of electric vehicles

Mercedes-Benz South Africa (MBSA) is forecasting an increase in electric vehicle (EV) sales in 2023.

This is despite the high price of most EV and New Energy Vehicle (NEV) models, in addition to the country’s power supply and offloading challenges.

Expected increase in demand

Mark Raine, co-CEO of MBSA and executive director of passenger cars at MBSA, spoke about the expected increase last week at the South African market launch of the luxury carmaker’s new EQE electric vehicle, which will cost Rs 1.8 crore including service. and maintenance plan.

It has a range of 645 km and enhanced charging, which means it takes 15 minutes to recharge it for 250 km.

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The EQE launch follows MBSA’s launch of an electric vehicle offensive in the South African market with the launch of the EQA, EQB, EQC and EQS models in the third quarter of last year.

Raine said between 300 and 500 EVs have been delivered to South African customers of all brands so far, but he expects a strong upswing in EV sales in the country.

He said MBSA only joined the EV “party” in South Africa at the start of the third quarter of 2022 and other brands introduced EVs to the SA market later than they had in other international markets.

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Raine said MBSA failed to deliver the expected volumes of EQ models to the domestic market due to supply challenges.

It foresees a strong increase in the adoption of electric vehicles and that after 2026, sales of its EQ electric vehicle portfolio will account for 50% of its sales in South Africa.

“Why do I think so? Because it will be a rapid transformation and whether we like it or not, the world is going in that direction, and highlights South Africa and [saying] that we will be different will not work, especially in the luxury market where we will be the first adopters”, he said.

Raine denied that EVs are marketed in South Africa as loss leaders, stressing that MBSA’s EV pricing strategy is sustainable and also fair to consumers.

Too expensive?

Responding to suggestions that electric vehicles are too expensive in the South African market, especially with the economy performing poorly and household disposable incomes under pressure, Raine stressed that “especially with electric vehicles, it’s not about not just the list price, but the cost of ownership.”

Raine was unable to provide an update on the auto industry’s request to the government for price parity between import duties levied on internal combustion engine (ICE) vehicles and NEVs.

“I don’t really have one. The government at the moment is probably preoccupied with more important matters than looking at this issue. We know it’s currently being discussed and assessed, but we don’t have an update yet.”

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Import rights

Electric vehicles are subject to 25% import duty, while 18% import duty is paid on ICE vehicles.

The Minister for Trade, Industry and Competition, Ebrahim Patel, published a Green Paper in May 2021 on the advancement of new energy vehicles in South Africa.

The stated aim was to finalize the strategy within 90 days of its publication to allow policy proposals to be presented to Cabinet for consideration in October 2021, but the policy has not yet been finalised.

Raine said the concept that MBSA is trying to advance is that EV charging needs to rely much more on solar and renewable energy than Eskom’s conventional electricity supply.

He said 99% of his EV customers bought their vehicle on a monthly installment and since then their cost of ownership has come down from spending an average of Rs 5,000 to Rs 7,000 per month on fuel up to a maximum of Rs 2,000 per month on electricity load charges.

Raine refuted suggestions that the cost to consumers of installing a solar energy system on their home should be added to the cost of buying an EV.

“The concept is that you’re not adding price to your car, you’re replacing the expenses you’d otherwise pay in electricity for your home, and an electric vehicle just supplements that,” he said.

Raine also highlighted the cost benefits of a solar power system if a consumer uses their geyser and pool pump outside of the system.

“Our strong recommendation as a brand in terms of sustainability and respect for the environment is that our customers should opt for an electric vehicle, but at the same time they should look to go off-grid or switch to renewable or solar energy.

“So it really adds up as a business case. I’m totally convinced of that,” he said.

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Raine added that MBSA increased its sales by 37% in 2022 compared to the previous year, with December 2022 the company’s strongest sales month since the pre-Covid-19 era.

He predicted that MBSA will grow double-digit sales by 2023, “that’s 10% more.”

That contrasts with a much lower forecast for overall industry new vehicle sales in 2023 from automotive business council Naamsa.

Mikel Mabasa, the chief executive of Naamsa, said earlier this month that GDP growth in South Africa continues to adjust downwards and is now expected to be 1.1% in 2023 .

“Given the close correlation between new vehicle sales and the country’s GDP growth rate, single-digit growth in new vehicle sales could be expected by 2023 as the market returns to levels pre-pandemic in sales and exports,” he said.

Mabasa also highlighted growing pressures on household incomes, adding that the consumer trend to buy smaller and less expensive cars, typically sport utility vehicles (SUVs) or crossovers, continued in 2022.

This article originally appeared on Moneyweb and has been republished with permission.
Read the original article here.

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