South Africa’s car industry risks falling behind those of Ethiopia and Egypt due to the lack of electric-vehicle (EV) manufacturing incentives in the country, according to Martina Biene, MD and chair of VW South Africa.
Automakers in the country have been waiting for years for government to finalise its Green Paper on EVs which will establish a clear policy foundation and enable the country to coordinate a long-term strategy for the production of these autos and their related components.
The implementation of the Green Paper is vital to the domestic industry as it stands to lose up to 20% of its automotive exports by 2035 when the European Union, South Africa’s biggest export destination, plans to initiate a ban on the sale of petrol and diesel cars.
Not only will the dragging of feet by government affect exports, but also future investment decisions by major automakers.
“Electric-vehicle policies are popping up everywhere. Egypt has one and even Ethiopia, a country that is not known for automotive industrialisation as South Africa is, has an EV policy,” said Biene, The Sunday Times reports.
“Volkswagen has to prioritise countries globally and because of a missing policy, South Africa doesn’t get high up on the list of countries to be prioritised, and why would we be? Every day and every month we are missing out on opportunities for investment that others are getting faster.”
As such, it will be a long time before VW commits to producing an EV on local soil, said the MD.
“I don’t see us producing EVs locally this decade. Because Egypt has an EV policy in place, I would say if I wanted the first electric vehicle produced in Africa, I would have to go to Egypt. Why would I go to a country that is not catering for EVs?” she said.
Other considerations include the lack of availability of synthetic fuels designed for hybrid vehicles, and the absence of battery component production, despite South Africa having all the raw materials available to do so.
Automakers such as BMW have taken matters into their own hands, investing R4.2 billion into its local manufacturing facilities to produce the plug-in hybrid X3 SUV without receiving any special treatment from the government.
“We have been very clear that electrifying our local operations is part of future-proofing Plant Rosslyn because we see the European markets going electric,” said Peter van Binsbergen, BMW Group South Africa and Sub-Saharan Africa CEO.
“Since we believe in that, we gone and done it. That is what is important.”
Announcement expected 1 November
The Department of Trade, Industry, and Competition (DTIC) is expected to finally make an announcement on the country’s EV policy on 1 November 2023.
The document must consider wide-ranging impacts on the industry, and the DTIC had to involve all the automakers in the country through the National Association of Automobile Manufacturers (Naamsa) in order to determine how the legislation will affect them across a range of vehicle types including passenger cars and commercial vehicles, this being touted as the main reason for the delay in its publication.
“They have since said November 1, but there is that commitment to announce something. There has been engagement with DTIC, the minister of finance, and the OEMs through Naamsa,” said Biene.
Keyword: South African car industry risks falling behind Ethiopia and Egypt – VW