SA's new energy vehicle market: Trends, challenges, and insurance implications

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“South Africa is seeing an uptick in new-energy vehicles (NEV) like hybrids or electric vehicles – incentivised by the idea of saying goodbye to petrol stations for good,” says Keletso Mpisane, head of Blink by MiWay.

As countries around the world incentivise electric vehicles through tax breaks and legislation, these cars are becoming more accessible. For instance, over one in three new cars registered in China in 2023 were electric, and in Europe, this figure stands at one in five cars according to the international energy agency.

More than 15 manufacturers, including the likes of BMW, and Volvo and new players like BYD and Haval, now offer NEVs in South Africa, with more expected to join. According to the automotive council 7,693 more of these cars were sold in 2023 compared to the year before, a year-on-year increase of 65%.

“While these accounted for less than 2% of total new car sales last year, these figures show that consumer interest is on the rise,” says Mpisane. She adds that South Africa’s motoring sector is in the early stages of adopting electric vehicles, with new policies expected to bring prices for NEVs down as the market adapts.

With this in mind, let’s explore the world of NEVs, and try to figure out which option works for who and what impact these cars have on insurance plans.

Full electric vehicles

Electric vehicles (EVs) or battery electric vehicles (BEVs) are propelled by at least one electric motor that rotates the wheels. This smog-free option sits at the opposite end of the spectrum to the internal combustion engines we commonly rely on today.

“In addition to being completely independent of petrol, BEVs have the added benefit of fewer moving parts compared to fuel-based engines. This lowers servicing and maintenance costs,” says Mpisane.

Your regular driving routes and habits should be the main indicator of how suitable an EV is to your lifestyle. If you drive long distances to get to work and frequently take out of town trips, EVs might not be the right fit. Here is why.

More affordable options like the BMW i3 or the BYD Dolphin are smaller, meaning they can only travel short distances with a single charge. EV drivers shy away from longer trips because of concerns that they could run out of charge on long trips. This is commonly called range anxiety.

“Having an insurer that has roadside assistance for EVs should mitigate worries about range anxiety. Your cover should provide for emergencies like towing the car to the nearest charging station,” advises Mpisane.

Fortunately, more charging stations are being added to malls and petrol stations. Find a map to the nearest charging stop here.

The higher end of the EV market presents cars that get you more distance from a single charge; however, these vehicles will likely attract higher premiums thanks to their increased value.

Another thing to consider is that EVs require specialist parts which can be more expensive to source. Longer service and maintenance plans offered by EV manufacturers when compared to those for traditional vehicles, could offset this downside for some.

Hybrid cars

If worrying about range is not a concern you want to have, you might want to consider a hybrid vehicle.

In this setup an internal combustion engine is paired with one or more electric motors to power the vehicle and in the case of the plug-in hybrid vehicles (PHEV), the batteries that power the motor must be charged like an EV.

Traditional hybrids have both engine and electric motor, but they commonly use a method called regenerative braking to charge the battery. These are the most common NEVs in South Africa – with over 3 000 models sold in early 2024. PHEVs are less popular, with fewer than 140 being sold in the country in the first quarter of 2024 and only 333 units sold in 2023.

Unlike traditional hybrids, PHEVs can go further and faster on electric power alone. Normal hybrids are best suited for shorter trips in traffic because they can rely on the motor in those scenarios and the combustion engine takes over under heavy acceleration and higher speeds.

Mpisane notes that, “traditional hybrids will help city commuters reduce fuel costs and be able to take a road trip when desired. PHEVs on the other hand are better suited for people living in houses where they can access a charging station. If you want to get a full EV one day, this option prepares you for it.”

Hybrids are extremely fuel efficient and they offer peace of mind for long trips because you can just add fuel to the tank. They are ideal for those who seriously want to cut down on their carbon emissions.

However, the dual systems they operate on can be complex, bringing on higher maintenance costs.

Insuring a hybrid car may be a bit more affordable than getting cover for EVs as the lack of EVs in South Africa makes parts more expensive. Hybrid cover will still cost more than insurance for a internal combustion engine cars but hybrid owners can expect to save money in other areas like brake replacements thanks to regenerative braking.

The Blink by MiWay head concludes with a reminder that, “as NEV technology gets better, and carbon levies impact the market, these green alternatives will pay off for owners and the environment in the long run.”