When considering the current energy crisis in the country, South Africa’s luxury vehicle market is destined to become an electric vehicle (EV) market, says Mercedes-Benz South Africa (MBSA) co-CEO Mark Raine.

Many customers in this segment are installing off-grid energy systems, such as home solar, which means that the required power to charge EVs is readily available in these households.

Eskom’s struggle to supply electricity is unwittingly “almost making EVs more viable” as higher-income consumers seek as much independence as possible from the country’s institutional woes, says Raine.

Surging Eskom electricity prices, as well as sharply rising fuel prices, boosted by a weakening rand, are also working in favour of the expansion of EVs in this segment, as these factors all serve to reduce the total cost of ownership of an EV, he adds.

By saving roughly R500 a month by driving an EV, it is possible to make up the higher purchase price of an EV versus internal combustion engine vehicle within three years, says Raine – “plus, you never have to pay for petrol again after that”.

“It’s a good business case.”

Raine laments the rand’s recent and sudden plunge against major currencies.

“Volatility and uncertainty such as this create a multitude of problems in the business environment.

“And, at the end of the day, it is always the consumer that pays. A business can only shield consumers up to a certain point.”

Raine says the rand’s current decline against the dollar and the euro will only become visible four to five months from now as imported goods procured at the new, weaker exchange rates trickle into the domestic market.

EV Progress
About 30% of all new Mercedes-Benz car sales in the UK are already electric, says Raine.

In South Africa, however, the uptake has been more sluggish than what was initially hoped for, he adds.

This is partially because of local homologation challenges, high import duties on EVs, as well as a lack of allocation from MBSA’s parent company, with other, more EV-friendly markets first in line to receive new product.

“We would, for example, have liked it if the EQS was here sooner,” says Raine.

“It is, however, being homologated and should be in dealerships in mid-July.”

Currently, only 5% of MBSA’s sales in South Africa are EVs.

“We have seen early adopters move first to acquire these vehicles,” notes Raine.

“The EQA is the most popular, and also the most affordable in the EQ electric range.”

As from 2027 onwards, Raine believes EVs will make up 50% of all MBSA new-car sales in South Africa.

This year’s sales should already receive a boost from the launch of the EQE sedan and sports utility vehicle (SUV), as well as the EQS SUV.

“This will see our portfolio go from four EVs to seven,” says Raine.

As for the general domestic premium/luxury market, Raine believes sales are likely to tread water in 2023.

For this year, and going forward, he says MBSA will have a strong focus on SUVs, with the newly launched GLC set to boost domestic sales.

“We see a strong transition to SUVs in the local market and we believe that the new GLC is the ultimate lifestyle vehicle –it is the perfect vehicle for South Africa.”

MBSA will also this year add the GLB 35 SUV to its portfolio, with these units only available for sale online.

However, says Raine, the customer’s nearest dealership will remain the trusted partner for delivery and services.