China is expected to dominate the global electric vehicle (EV) market in the future, according to Dr Martyn Davies, MD emerging markets and Africa at Deloitte and African automotive lead partner.
The Chinese are the new Koreans in the next 10 to 15 years, Davies told a recent National Automobile Dealer Association (NADA) webinar.
Davies said the Chinese had underestimated the power of brand in the passenger sedan market but the exception now was Haval, which has been very successful. Haval is the special utility vehicle (SUV) brand of Chinese automaker Great Wall Motors (GWM).
“The segment is right, the price is right and it's what the consumer seemingly wants in South Africa.
“On the light commercial side, I think they will be increasingly incredibly relevant but for the rest of the market I think the big disruption will come in the next 20 years as the ICE [internal combustion engine] is starting to be phased out of markets.
“The Chinese will start to dominate in an array of industries for smaller mass produced EVs. They are building those economies of scale,” he said.
Davies added that there are more than 500 manufacturers of EVs in China and more than 1.1 million EVs will be sold in China this year, which is staggering.
He said there has always been significant volume production in every industry in China and “this Darwinian economy where the fittest survive” will result in a handful of survivors which will become the global players in the course of the next 20 years.
“The Chinese will be dominant in post ICE vehicles around a few brands but not in every market. I think many of the German brands will prevail. They are just too strong. But they [Chinese] will make significant inroads, just as the Koreans have in ICE effectively in the last 15 years,” he said.
NADA chairman Mark Dommisse questioned how the South African government will be able to subsidise EV imports because they will be too expensive without any subsidy. Dommisse said this will create a big quandary for the government because they will then not get tax from import duty and motorists with EVs did not buy any petrol.
Various taxes and levies on the petrol account for a significant portion of the retail price of petrol.
Dommisse believes there will have to be a trade-off, with the industry starting local production but will have to be able to compete with the likes of China.
“We also have some great technologies that we are good at and our catalytic converter industry is world leading.
“I don’t think it can be too difficult to convert that into battery production if the DTIC [Department of Trade, Industry and Competition] Industry put some focus on it and we can offset the cost of EVs being imported into this country by an industry like that,” he said.
Davies agreed, adding that this “talks” to the issue of the entrepreneurial state. However, Davies questioned whether the state is able to actively disrupt established vested interests and technologies in certain parts of the economy.
He cited the example of petrol service stations in South Africa and how South Africans when they travel abroad for the first time sit in their cars at petrol stations waiting to be served before realising they have to do it themselves.
“The reason we do not pump our own petrol in this country is because its an employment creator and retention exercise.
"EVs will change that dramatically. So how willing is the state to disrupt itself and force competitiveness on its own economy and also people.
“I don’t think that is something which a government with a socialist tendency is often able or willing to do,” he said.
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