The global electric car (EV) rental market is expected to surge to the value of US$18 billion (R328 billion) before 2028, but South Africa’s car rental experts say it’s unlikely that the country will experience this type of growth in the sector anytime soon.
It appears that Hybrid Vehicles will occupy the eco-conscious niche in South Africa and probably in sub-Saharan Africa, for some time.
Data released by Technavio, a global technology research and advisory company, finds that the EV rental market should grow at a compound annual growth rate of 16,68%, driven by international tourism growth (which is leading to an increase in demand for all rental vehicles.)
In addition, advances in battery technology are enhancing the performance of these rentals, and an increasing number of consumers in Europe, Asia and the US are opting for eco-friendly transportation options.
SA infrastructure lags
Sandile Ntseoane, General Manager of SAVRALA, said in terms of electric car rentals in South Africa, that the uptake has not been significant at all.
“The adoption rate of electric vehicles in the South African car rental space is so negligible, in fact, that SAVRALA has no basis to collect data on it,” he said.
The research from Technavio noted that the car rental market of developing countries faces the challenge of increasing power demand from the growth of electric vehicles, and uncertain power supply.
Ntseoane agreed with this view, saying that the infrastructure of the country is simply not ready.
“If you are travelling to Mpumalanga as a tourist, for example, there are no charging stations there. There has been some improvement, but charging stations are still lacking all over the country, even at airports,” he said. He also explained that these vehicles are too expensive for the South African market.
“There are still a lot of unknowns,” said Julian Visagie, CEO of Hertz South Africa.
According to the New York Times, Hertz in the US experienced losses after investing heavily in 100 000 Tesla and Polestar electric vehicles. This backfired due to high costs and low demand.
“When a tourist comes on holiday, and he’s in a foreign country, he’s not sure where the charging facilities are or how these facilities work. He will be hesitant to want an electric vehicle,” he said.
Sustainable solutions
Visagie explained that while the adoption rate for electric vehicles in the car rental industry has been low, an increased focus on sustainability is definitely a notable trend in the industry.
“We are all under pressure to improve the sustainability of our businesses and reduce our carbon footprint, and the demand for sustainable options, especially from the corporate space, has been increasing,” he said.
However, these clients are more likely to opt for one of Hertz’s hybrid vehicles, according to Visagie. “Probably two years ago, we started bringing plug-in hybrids into our fleet. So this has a battery as well as a normal internal combustion engine. Once the battery runs down, the car goes over to the normal engine, which can charge up the battery,” he said.
This reduces emissions and fuel consumption.
“International tourists and locals are happy to book the hybrid. So I think that is where the market will go first. I think in the next 12 to 18 months we’ll see a lot more plug-in hybrids coming to South Africa” he said.
Senzo Madikane, marketing manager of First Car Rental said that the adoption of electric car rentals in South Africa is influenced by the fact that these vehicles are not readily available, neither locally, nor through imports.
“As they bring more New Energy Vehicles (NEVs) into the market within the framework of South African legislation, we plan to expand our fleet with these models,” he said.
Elon Musk, CEO of Tesla has said that South Africa’s electric car market is stunted by the country’s prohibitive import duties. Traditional vehicles face an 18% import duty, while electric vehicles are slapped with a 25% tax.
“Import duties are super high in South Africa to protect the domestic industry,” said Musk in a post on social media platform X.
Madikane also said that First Car Rental plans to increase its hybrid models to reduce carbon emissions.
“While we, as users rather than manufacturers of cars, have limited influence over the availability of electric vehicles in South Africa, we remain committed to incorporating more of these vehicles into our fleet as they become available,” said Madikane.
