“South Africa and the rest of Africa has the minerals required for NEVs. We need policy and public private collaboration to exploit this opportunity.” (Photo by Costfoto/NurPhoto via Getty Images)
South Africa is already part of the global vehicle manufacturing supply chain but needs to to locally beneficiate the raw materials for new energy vehicles and increase exports, Toyota South Africa’s vice-president for corporate services, Suben Moodley, said.
He told the KwaZulu-Natal Investment Conference in Durban on Tuesday that sales of new energy vehicles — hybrid electric vehicles with a small battery — had grown since 2019. “Sales grew by 53% in 2021, 54% in 2022 and 35% in 2023 (up to 14.2 million units) but growth rates are expected to slow down to around 10%.” New energy vehicle sales represented 15.7% of all new vehicle sales for the period.
“One third of global vehicle production is in China with 30.2 million units or 32.2%, while South Africa ranks 22nd with 0.67% of global production volumes. We produced 633 000 vehicles last year,” Moodley said.
“Why this is important is that to be recognised as a tier one automobile country, you need to be producing in excess of one million vehicles.”
The vehicle industry master plan sets a target for the country to account for 1% of global production — about a million vehicles — by 2035.
Moodley said in 2022 the United States — the seventh largest producer of vehicles — had, at 83%, the greatest rate of people owning vehicles, followed by Germany (58%), France (47%), Japan (61%) while China, the largest producer of vehicles, was at 17%, as was South Africa, with India coming in at 2%. Africa had 4% of its population owning vehicles.
“It shows that there is opportunity for motorisation in Africa, India and China — those are the future growth markets in the industry,” Moodley said.
Africa accounts for about 1.3% of global production, but the continent has had the biggest annual growth in vehicle production, increasing by 14.5% to 1.17 million units in 2023. Of these, 63% were exported, mostly to Europe.
South Africa is the biggest producer on the continent (633 000 units in 2023), followed by Morocco (535 000 units in 2023), Egypt (51 000 units in 2022), Kenya (20 000 units in 2023) and Algeria (2 500 units in 2023).
Moodley said there was “huge opportunity” for South Africa, which exports less than 13 000 vehicles to the rest of the continent, to increase this number under the African Continental Free Trade Area agreement.
There are seven original equipment manufacturers (OEMs) including Volkswagen, Toyota, BMW, Mercedes, Nissan, Ford and Isuzi, operating in KwaZulu-Natal, Gauteng and the Eastern Cape.
These companies and their suppliers support 116 000 jobs as well as 498 000 downstream jobs, while the industry accounts for 5.3% of South Africa’s GDP and contributed R21 billion to the trade balance of payments through exports in 2023.
“For every one job we create in the automotive OEM there are at least 16 jobs created in the broader economy. Hence it is a multiplier that cannot be underestimated,” Moodley said.
Moodley said South Africa had seen a rapid adoption of new energy vehicles (NEVs) in the past few years, with Toyota and Lexus making up 45% of the country’s total sales in 2023.
“Initially there were two brands in 2020 and now there are 15 brands offering NEV products,” Moodley said, adding that Toyota was aiming to account for 50% of NEV sales by 2035.
“We need to reshape the industry towards the future of the NEV vehicle. We need a sustainable and responsible acceleration toward decarbonisation, and a localisation opportunity exists, and that is where we should be looking to attract investment,” Moodley said.
“Looking at batteries, lithium is not a widely available commodity globally. We need to recognise that battery electric is not the only accessible solution — and it has cost and infrastructure implications. The question is, why don’t we prioritise hydro-electric vehicles? You can produce more, they are affordable, they are cheaper, you don’t need the infrastructure and you can have a positive impact on carbon emissions at the same time.”
Moodley said there was a need to optimise the localisation benefits of NEV production as well as the local beneficiation of the critical minerals needed.
“Minerals required for batteries, lithium, nickel, copper, cobalt, graphite, calcium fluoride and tungsten, we have those present in South Africa and in Africa. The challenge is: how do we beneficiate them in our country?” he said.
“South Africa and the rest of Africa has the minerals required for NEVs. We need policy and public private collaboration to exploit this opportunity.”