Meiring seeks R6bn-plus to ensure Joule rolls out, breaks even

    The Joule electric vehicle (EV) has received around R200-million in funding already, with another R6,5-billion required to take the venture to the point where it would break even, says Optimal Energy CEO Kobus Meiring.

    “This means a point where a number of cars would have already rolled off the assembly line.”

    The funding received up to now came from various government institutions as they hope to stimulate the start of a new type of automotive industry in South Africa.

    Optimal Energy aims to produce South Africa’s first home-grown EV, with around 90% of the anticipated 50 000 cars a year production volume to be exported. 

    Meiring expects the global fledgling EV market to grow significantly.

    He says some commentators believe that ten-million EVs will be produced a year by 2020, which he believes leaves the Joule as a viable competitor, with the 50 000 unit annual production level then really only making up a small fraction of the market.

    The Joule, with the second prototype already being tested, is a plug-in-and-charge vehicle, with a range of 300 km before it requires recharging.

    Of the funding still required, Meiring says Optimal Energy’s funding models suggest that “it would be good” if roughly 17% of this came from the South African government, with the remainder flowing from other sources, such as loan agreements.

    Government’s Industrial Development Corporation has just approved another round of funding for the Joule, with the East London Industrial Development Zone (IDZ) and the Eastern Cape Development Corporation also providing some additional funding.

    These numbers are, however, not anywhere near the billions required to now fully commercialise the venture. 

    “The ideal is that we now secure some line of funding from national government . . . but even a guarantee will do,” says Meiring. “This initial development funding from government has been great, but now we need funds to industrialise the Joule.”

    The East London IDZ wants to host the Joule production plant.

    Meiring expects the first Joule to be delivered in 2014, with the plant to be completed in the middle of 2013. Production of the first Joule was originally scheduled for 2012.

    Pricing in today’s terms for the Joule models will be around R235 000 to R278 000. 

    Payment for the battery of the EV, which is the most expensive component on the car, will be separated from the vehicle’s price tag, and will form part of a motorplan, which will possibly also include the electricity cost to recharge the vehicle, says Meiring.

    Optimal Energy has already had talks with several well-known vehicle manufacturers to determine potential synergies. The list of names include some well-known European, US and Indian brands. Some of these talks were initiated by Optimal Energy, and some by the manufacturers.

    Meiring says it would be possible, for example, to share some parts, as well as logistics chains.

    However, the one aspect where traditional vehicle manufacturers lose interest in an EV, is with the traditional service model, he explains.

    “Repairs and services form a big part of a manufacturer’s income, and this is not relevant with an EV [which has only a few moving parts], so the retail model as it has existed in the past hundred years in the automotive industry is not applicable to the Joule,” he explains.

    Meiring was previously programme manager of the Rooivalk attack helicopter and Southern African Large Telescope (SALT) projects. With SALT operating well, but the Rooivalk now parked, one is tempted to ask if the Joule is really a viable project. It is, after all, pretty ambitious for a new vehicle brand to make a name for itself out of nowhere.

    “I am overwhelmingly positive,” enthuses Meiring.

    He says the Rooivalk happened at a time when South Africa experienced significant upheaval as it transitioned into a democracy, while selling a military product requires 30 years of political and economic stability within the country of origin.

    Meiring says the Joule is different, as it is a commercial product to be sold into a growing global market. It also has no political connotations, as is often the case with military products.

    “This is a unique opportunity to establish an entirely new industry in South Africa. I believe we have a competitive product, backed by the necessary support.”

    However, Meiring does issue a warning on the project’s timeline. He says there is a rather small window of opportunity to enter the EV market while it is still young.

    “If the production schedule slips, let say to 2016, then we have to think again.”

    Edited by: Creamer Media Reporter