The high demand for electric vehicles is rising exponentially, this calls for urgent need for local manufacturing of electric vehicles in South Africa.
A study conducted by the University of Cape Town show that electric vehicles (EVs) and plug-in hybrids could account for more than 20% of the new car market in South Africa by 2030. Meanwhile a survey by AutoTrader and Smarter Mobility Africa revealed that consumer appetite for electric vehicles is on the increase, with 72% of more than 2 800 surveyed South Africans saying they are planning to buy an electric vehicle within the next five years.
The urgent need for local manufacturing will not only meet the demands of South Africans who want to switch to electric vehicles, but also the European emission standards. South Africa currently exports more than 60% vehicles to Europe, however by 2030 this market would no longer allow importation of internal combustion engine vehicles. If we don’t quickly accelerate the roll-out of electric vehicles, we risk losing this market.
South Africans who are importing electric vehicles currently pay roughly 25% of import tax, compared to importing an internal combustion engine vehicle, which is only 18%. Local manufacturing has the potential to eliminate or reduce the high import taxes.
To respond to the increase in demand, original equipment manufacturers (OEMs) including, BMW, Hyundai-Kia group, Jaguar Land Rover, Mercedes-Benz, Mazda, Nissan, Toyota Motors, Volkswagen group and Volvo are currently developing electric vehicles manufacturing capacity.
As we’ve seen recently, with Volkswagen group announcing their plan to invest more than R1 trillion ($100 billion) in new automotive technology plan, which projected electric vehicles to make up 50% of the group’s total sales by 2030 and 100% by 2040.
In South Africa, Toyota SA Motors have recently launched its Corolla Cross hybrid (combined internal-combustion engine and electric motor), which was manufactured at its Prospecton plant in KwaZulu-Natal. Toyota SA is the second company to manufacture a hybrid vehicle in South Africa, after Mercedes-Benz SA. The 2016 Mercedes-Benz C350e plug-in hybrid, was the first ever locally manufactured hybrid vehicle in Africa, and South Africa.
Toyota SA is also investing R2.6 billion in the production of the Corolla Cross hybrid, which has already generated a total of 575 new jobs at its plant while over 1200 direct jobs were created in the component supply base. The project also contracted 56 local suppliers to provide parts.
This shows South Africa’s enormous potential for economic development through local manufacturing. The transition to electric vehicles comes with massive opportunities for growth in future, it will also allow the country to remain competitive in the automotive industry.
However, OEMs cannot be expected to make these investments on their own. Collaborative efforts are required with government, industry and citizen to make the transition a success and boost the country’s economic development.
Government need to develop adequate policy frameworks and support emerging entrepreneurs from the local manufacturing sector. We have businesses such as Mazibuko Motors who recently launched their first electric bakkie prototype, and are now planning to start production of two models by 2023 – an SUV and electric bakkie set to be South Africa’s first ever electric bakkie. There’s also Golden Arrow bus services company, which recently launched two fully electric buses in its bid to reduce carbon emissions and use renewable sources of energy. The public transport operator is currently looking for local manufacturers to produce roughly 60 electric buses.
It’s no doubt that electric vehicles are no longer a possibility but an inevitability.
AutoTrader revealed that the growth in searches for electric vehicles in South Africa has increased to 211% while electric vehicle enquiries are up 44%. The trade, industry and competition auto green paper on the advancement of new energy vehicles in South Africa, shows that global sales of new energy vehicles accelerated in 2020, rising by 43% to 3,24 million units compared to the 2,26 million units sold in 2019.
The numbers are increasing rapidly each year and we can’t afford to lose this opportunity to attract investors in this fast growing industry.
The South Africa’s automotive industry is a significant contributor to gross domestic product, with a contribution of more than 6% . The sector accounts for more than 100,000 jobs in assembly and component manufacturing, which makes it a big magnet for foreign direct investment.
The automotive industry, government, and the entire country need to recognise that the nature of vehicles is changing dramatically and we need to catch up or lose global markets, opportunity to penetrate new markets, develop new skills and generate new jobs.
Developing adequate policy frameworks must be an urgent point of focus for government to catalyse the transition of electric mobility. Collaborative efforts are needed to modify existing manufacturing plants. The government also need introduce incentives for electric vehicle purchases and manufacturing.
Note to Editor
Robert Walker is Event Director – E-Mobility Congress South Africa (EMCSA)
The E-Mobility Congress South Africa is an annual E-Mobility conference. A platform created for electric vehicle experts, industry leaders, and specialists to come together and share valuable information about industry innovations and initiatives. The EMCSA conference connects people presenting them with an opportunity to spread electric vehicle awareness and further grow and develop the E-Mobility industry in South Africa.