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Nissan-BMW to Reach Electric Car Concept to South Africa

Zacks Equity Research

Nissan Motor Co. NSANY, BMW AG BAMXF and Volkswagen AG VWAGY are among the carmakers that are in talks to popularize electric vehicles in South Africa, per Bloomberg.

One of the objectives is to persuade lawmakers to reduce import tariff costs on electric vehicles by 23%. This shall assist to ramp up domestic sales. Another objective is to supply a charging infrastructure in a country, where the state-owned power is going through crucial monetary adversity. The industry aims to present a unified stance to the government by the end of the current year.

From Toyota Motor TM to Isuzu Motors, South Africa has been a hub for attracting plants operated by seven carmakers. Till date, there is no firm plan for an electric car or hybrid manufacturing in South Africa. However, in 2018, the South Africa government and industry agreed to expand production incentive program, creating jobs and enabling models like BMW X3 sports utility vehicle and Nissan’s Novara pickup to be produced regionally.

The consumers in South Africa will not determine the electric-vehicle play. In fact, it shall be determined by the requirements of export markets. The standard of the local plants of BMW, Ford Motor Company and Mercedes-Benz AG is good enough to make retooling simple. The subsequent product launched in South Africa by these automakers might feasibly be electrical.

Under the new manufacturing plan, the automakers are expected to more than double their annual production to as much as 1.4 million vehicles by 2035 and that is only possible when they make electric cars as well as gas or diesel units.

BMW’s i3 and i8 are two of only three models presently accessible in South Africa, and only 620 units have been sold. Jaguar Land Rover introduced the I-Pace earlier this year while Nissan is holding off on the launch of the latest Leaf till a settlement is reached on import tariffs. The plan by Volkswagen to introduce an electric vehicle in Rwanda stands in contrast to a lack of other developments.

Another headwind to accelerated electric car production in South Africa is Eskom Holdings SOC Ltd., the power provider that reported an annual loss of approximately $1.5 billion and requires an $8.8-billion government bailout over the subsequent three years.

Additionally, the necessity to turn around Eskom’s monetary state of affairs is more of urgent concern to the federal government than utilizing it to enable the electric-car industry.

Currently, Nissan, Volkswagen and Toyota have expected long-term growth rates of 9.31%, 5.14% and 10.54%, respectively, whereas BMW has an expected negative long-term growth rate of 2.1%.

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