South Africa’s government has made it clear that due to the current energy crisis, and coal-dominated grid, it is too early to encourage local consumers to buy electric cars.
Upon releasing the country’s Electric Vehicle White Paper this week, the Minister of Trade and Industry, Ebrahim Patel, said that stimulating the local market would only happen during the second phase of the country’s EV strategy, which could take up to seven or eight years to materialise.
During the first phase the Department of Trade, Industry and Competition (DTIC) will seek to encourage and incentivise the local production and export of electric vehicles. This is a vitally important step given that Europe and the UK currently account for around half of South Africa’s automotive exports, and both plan to ban the sale of new internal combustion (ICE) engined vehicles by 2035.
But when can we expect to see the first electric vehicles to start rolling off South African assembly lines? Having consulted with the various motor manufacturers, Minister Patel anticipates that the first EVs are likely to be produced from as early as 2026, albeit in limited numbers.
He then expects a sharp growth in EV production between that year and 2030, while at least one manufacturer has indicated that it plans to move into EV production “early after 2030”, depending on the speed with which the market, both globally and locally, transitions to greater consumption of electric vehicles.
The Minister also said there would be a temporary reduction in import duties for EV batteries fitted to vehicles produced and sold in South Africa, although the long-term goal would be to secure large-scale battery production on local shores.
Patel reiterated that he wanted South Africa to continue to be a vehicle producer with a long-term future.
“We don’t want to be only an internal combustion engine producer. There is a danger that if poorly managed, electric vehicles would be imported, ICE vehicles would be produced for the domestic market and export, and come 2030 South Africa will be sitting with a declining asset base, which is a purely ICE based production capability,” Patel said.
This would then leave the country with a stranded industry as consumers abroad transition to EVs in anticipation of the 2035 ICE ban across Europe.
While the EV White Paper, released on Monday, outlines the government’s policy direction towards new energy vehicles, its exact elements as well as incentive schemes will be announced in the coming months.
But regardless of which policies exist, fixing South Africa’s infrastructural failings will be critical in ensuring OEMs continue to produce vehicles in the country.
To that end the DTIC has promised various actions in the coming years, including measures to improve the electricity supply as well as freight logistics reforms and refurbishing railway links.
Those in charge certainly have their work cut out. And with South Africa’s vehicle manufacturing industry accounting for six percent of GDP and around half a million jobs, there is no room for failure.