Impact of Tesla launching in South Africa

While it might not see blockbuster sales numbers at its launch, Tesla’s potential entry into South Africa will signal the local market that the country is ready for accelerated electric vehicle (EV) uptake.

That is according to Arthur Goldstuck, founder of business technology research company World Wide Worx.

Goldstuck recently told SABC News he believed that the EV maker’s launch in South Africa would have a more significant impact than if SpaceX rolled out its satellite broadband service Starlink locally.

That came after President Cyril Ramaphosa confirmed that he had a phone call with South African-born billionaire Elon Musk, CEO of Tesla and SpaceX, about potential investments in the country.

Ramaphosa later met with Musk in New York on the sidelines of the UN General Assembly.

Speaking to MyBroadband, Goldstuck said the timing of Musk’s subsequent comment that he would like to invest in and support South Africa’s growth was significant.

He noted that it coincided with the local launch of a new model from Tesla’s main rival — Chinese EV giant BYD.

BYD showcased its Seal premium sedan, a major rival for Tesla’s Model 3, to the media in the past week.

The Seal will be the brand’s third EV model in South Africa, following the Atto 3 compact SUV and Dolphin hatchback, the country’s most affordable EV.

Although BYD is an EV and hybrid powerhouse, Goldstuck believes the public is more likely to associate its expansion in South Africa with the rising presence of Chinese carmakers in general.

A plethora of Chinese brands — including Chery, Haval, Omoda, GWM, and BAIC — have seen rapid adoption due to their excellent value for money and the rising prices of more established brands.

Goldstuck explained that in the mind of the South African public, Tesla was much more closely associated with automotive innovation and EVs than BYD.

“BYD is largely known as one of many new or emerging Chinese brands that are trying to gain market share elsewhere,” Goldstuck said.

“Of course, this is not entirely accurate, but it is relevant from a South African perspective.”

“Should Tesla come into the South African market, regardless of its prices and gainable market share, if any, that will be a signal to the market and the public that the EV revolution has fully arrived in South Africa.”

Goldstuck said although Tesla’s local rollout might not result in blowout sales, its impact would be significant for EV relevance.

“The marketplace of perception will be set alight by Tesla in a way that no other brand can do for EVs,” Goldstuck said.

Local production doubtful

Goldstuck said it was highly unlikely that Tesla would launch local manufacturing in South Africa, given its vehicle production strategy in the rest of the world.

The company’s manufacturing is primarily concentrated in the US, with parts, equipment, and batteries produced at additional factories in Canada, Germany, and the Netherlands.

The only full vehicle production plant outside the US is in China, which is a much more lucrative market for EVs than South Africa and generally beneficial for lower production costs.

“An investment in China is a good investment in Tesla, not that country. An investment in South Africa would be generous for our country but not necessarily for Tesla,” Goldstuck said.

Without a local manufacturing capability, it would be unlikely for Tesla to offer models at prices competitive with the most affordable EVs in the country, including BYD’s Dolphin, which is priced under R600,000.

Pricing for Tesla’s most affordable car — the Model 3 — starts at $42,490 (R739,887) in the US and £39,950 (R919,077) in the UK.

The latter’s price is more likely to be closer to South Africa’s as it is also a right-hand-drive model.

Nevertheless, there are early signs that the brand could still see significant uptake.

Several MyBroadband polls have found that Tesla enjoys high EV brand affinity in South Africa.

In January 2024, we asked readers from what car brand they were most likely to buy an EV.

From 2,836 votes, Tesla placed second only to South Africa’s top car seller Toyota, and by a hair’s breadth.

Toyota amassed 534 votes, or 18.8% of the total participants, whereas Tesla racked up 515 votes — an impressive 18.2% share.

Despite not having launched a single model locally, it beat entrenched brands like BMW, Volkswagen, Audi, and Mercedes-Benz. The chart below summarises the findings from that poll.

No confirmed plans yet

Although the discussions between Ramaphosa and Musk have sparked new hope of a Tesla launch in South Africa, there are no confirmed plans for a local rollout at this stage.

Tesla suggested it was gearing up for a South African launch as it accepted deposits for the Model 3 in 2016, and Musk said a local showroom could open its doors before the end of 2017.

Seven years later, and the only Teslas confirmed on South African roads are three models imported from the UK.

A source close to Tesla’s local launch plans previously told MyBroadband that the company was holding out on a South African entry until annual EV sales reached a certain level.