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Aug 31, 2022

Electric Cars: The Pace of Disruption in Fuel Retail

Government-funded incentives, leaps in technology, and concerns about carbon footprint have facilitated the growth of the electric vehicle industry around the world. These developments are gearing up to disrupt the fuel retail sector - given the right conditions.

Entrepreneurs should always be asking themselves if the businesses they want to pursue will still be relevant in the future. This is the same for entrepreneurs getting into the fuel retail industry. Will petrol and diesel cars still be relevant in the future or should business owners be investing in an electric car charging station in their forecourt?

Electric car adoption around the world

The transition and adoption of electric cars is happening differently around the world. According to McKinsey & Company’s projections, by 2030 China and developed countries will use just 59% fossil fuel powered vehicles. They also predict that the fuel value pool will see a decline of –2% to –3% compound annual growth rate.

Developing countries are predicted to have a slower transition, where demand for traditional fuel will remain flat (or perhaps even grow in Africa and India) and will likely still represent 83% of the market share by 2030.

Rate of disruption in South Africa

While the number of options available for people seeking all-electric options has improved significantly in recent months, and there appears to be high demand for the vehicles, the pricing of these models still puts them well out of reach for most South Africans.

The rate of adoption of electric vehicles has been extremely slow with less than 1000 battery electric cars and plug-in electric vehicles sold since their introduction to the market in 2013. Sales figures of new electric vehicles in 2020 were less than 100, with the best year so far being 2015 when around 120 electric cars were sold. Other developing countries, such as India, have shown an increase in electric vehicle sales, which implies that the South African landscape has specific factors which deter potential buyers.

Barriers to electric car purchase

Preliminary studies in South Africa on consumer perceptions of electric vehicle purchases demonstrated a number of socio-economic and technological barriers that continue to impede the diffusion of electric cars in the automotive market.

A consumer survey by Mokhele Edmond Moeletsi suggested that the poor network of electric car charging stations is currently a deterrent for South Africans, preventing them from purchasing electric vehicles. Motorists must navigate the inconvenience of finding charging points, which are not present on all major roads.

Other factors which influence the slow pace of disruption in SA are the cars themselves. There is just one hatchback at an accessible price point, as well as a lack of variety in the models of cars. As of February 2022, there were just 20 electric car models available in the country, only one of which could be purchased for under R700,000.

Your future in the industry

Service stations will always be needed, whether it is to provide power or fuel. Customers will continue to require services, and dealers will continue to need support.

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