South Africa needs to adopt electric vehicles more aggressively — not just to protect the environment but also for the survival of the automotive sector. (Chris Ratcliffe/Bloomberg via Getty Images)
South Africa needs to adopt electric vehicles more aggressively — not just to protect the environment but also for the survival of the automotive sector. However, the government has been slow to put in place policies to make this happen.
The country risks being left behind by the global economy if it doesn’t make the shift, according to the head of Audi South Africa Sascha Sauer.
“A lot of jobs are at risk and a major contribution to the GDP and tax payments is at risk … All industry players, including the government authorities, need to make that major transition and make that transformation a success,” Sauer told the Mail & Guardian.
He said the government had dragged its feet in putting in place, policies that would fast track the move to electric vehicles (EVs).
“The government is not doing enough, in fact they have not done anything in terms of implementation,” Sauer said.
The department of trade, industry and competition 18 months ago released a draft green paper on a clear policy foundation for a long-term strategy to position South Africa at the forefront of advanced vehicle and component manufacturing.
But there has been no movement since, despite Trade and Industry Minister Ebrahim Patel acknowledging, in his 2021 budget vote address to parliament, the need to “step up efforts to build electric vehicles in South Africa, to keep our auto industry at the cutting edge of new market developments and to maintain our export capacity for key markets such as the EU and UK”.
“South Africa is late to the party. The window is still there but very tight and it is about to close. This industry and this country need to undergo a major structural transformation,” Sauer said.
“If you think about all the suppliers, the knowledge and skills that are needed from people who are suddenly supposed to produce an electric car, as compared to a combustion-engine car, or to service it, maintain it and even repair it, that is a major industry shift.”
South Africa’s industry has not produced EVs yet, although a handful of manufacturers, such as Toyota, Mercedes-Benz and BMW, have made hybrids, powered by an internal-combustion engine and electric motors, which use energy stored in batteries.
For the automotive component sector, the move to producing parts for EVs would not be difficult because new parts are produced with every new vehicle model, said the executive director of the National Association of Automotive Component and Allied Manufacturers, Renai Moothilal.
“The South African component supply base can support a transition. Much of South Africa’s component production is non-propulsion-based and is commonly used in internal-combustion engines, such as seating, trim and harnessing.
“New technologies and advanced materials will likely be required but component manufacturers make these types of changes regularly with every new vehicle model, so the EV transition will be no different.”
South Africa’s total vehicle exports raked in R207.5 billion from 298 020 units last year but this key contribution to GDP is at risk if the industry does not shift to manufacturing EVs. France and Spain are the latest countries to pledge to put a stop to petrol-driven vehicle sales by 2035.
According to the Automotive Industry Export Council’s latest export manual, the top three destinations for South Africa’s vehicles and parts last year were the United Kingdom with 60 260 units, Germany with 42 671 units and France with 22 130 units. Spain was seventh with 10 876 units.
“The accelerated move away from internal-combustion engine vehicles in the UK and Europe is expected to have a negative impact on the domestic industry and South Africa must therefore transition to new-energy vehicle production to maintain sufficient levels of revenue,” it said.
The global move towards EVs has been driven by regulations associated with climate change mitigation and air-quality improvement.
Efforts to scale up the adoption of EVs have also been hampered by the country’s power woes. Justin Manson, sales director at fleet management company Webfleet, says load-shedding is a considerable barrier to investment in EV infrastructure. Another is high import duties.
“These vehicles incur up to 25% import duties while, in comparison, internal-combustion vehicles are significantly lower at 18%. EVs are further subjected to ad valorem tax because they are considered by tax legislation to be luxury items. The average ad valorem tax for EV products in 2020 was 17%,” Manson said.
Another inhibitor to the uptake of EVs is affordability, says Ghitesh Deva, partner and automotive sector leader at Mazars. “The majority of vehicles sold in South Africa are entry-level and very few entry-level EVs are available. Most EVs available in South Africa are premium vehicles. The cost of EVs is partly driven by a higher import tariff relative to their combustion-engine equivalent.”
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