Is South Africa ready for the big plug-in? The future of the country’s automotive industry could be decided on November 1 when finance minister Enoch Godongwana delivers his medium-term budget policy statement in parliament.
After extensive lobbying by the motor industry, government is finally expected to reveal its long-awaited policy on new-energy vehicles (NEVs), which could include incentives that will be crucial to the survival of the country's car and bakkie manufacturers who produce for export.
With the global shift to more planet-friendly cars, local manufacturers will soon need to switch from producing internal-combustion engine (ICE) vehicles to NEVs, which include hybrids and electric vehicles.
The local motor industry wants a policy to allow the country to produce NEVs for the local market and for export, as South Africa's main export markets — the UK and EU — aim to end the sale of ICE vehicles from 2035. Nearly 67% of locally produced vehicles are exported, with the UK and EU accounting for about 60% of that.
The motor industry has engaged with government on the issue since May 2021 and is hoping for a clear pronouncement on November 1, said Neale Hill, immediate past president of Naamsa at the opening day of the SA Auto Week conference in Midrand on Wednesday.
“The longer we delay, the longer we move to the back of the queue,” said Hill, who is also president of the Ford Motor Company of Southern Africa, which produces the Ranger bakkie for the local and export markets.
He echoed the sentiments of Volkswagen MD Martina Biene, who said South Africa's motor industry risks getting outflanked by countries such as Egypt and Ethiopia as local manufacturers continue to wait for the government's EV policy.
Speaking to Business Times at the weekend, Biene said: “Volkswagen has to prioritise countries globally, and because of a missing policy, SA 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.”
Apart from introducing manufacturing incentives, local carmakers want the government to reduce the 25% import duty on EVs to stimulate local demand for battery-powered vehicles. Due to their high prices, EVs still represent less than 1% of local car sales.
Billy Tom, Naamsa president and CEO of Isuzu Motors SA, told the Auto Week conference that NEV sales increased 421% from 896 units in 2021 to 4,764 units in 2022, but remain negligible as a percentage of new vehicle sales. Naamsa said with government, it wants EVs to account for 20% of South Africa's new-vehicle market by 2025 and 60% by 2035.
Developing local battery production was also important to support local content in South African exports to Europe, said Hill.
The government has missed previous opportunities to set an EV policy, most recently in February’s budget, but Naamsa CEO Mikel Mabasa was confident an announcement would be made on November 1 as the auto industry is a critical part of South Africa's economic landscape, contributing about 6% to GDP.
Currently, only two of the country's major vehicle manufacturers make NEVs. Toyota SA produces the Corolla Cross petrol-electric hybrid and Mercedes-Benz SA manufactures a C-Class plug-in hybrid.
Why November 1 could be a watershed moment for new-energy vehicles in South Africa
Image: Supplied
Is South Africa ready for the big plug-in? The future of the country’s automotive industry could be decided on November 1 when finance minister Enoch Godongwana delivers his medium-term budget policy statement in parliament.
After extensive lobbying by the motor industry, government is finally expected to reveal its long-awaited policy on new-energy vehicles (NEVs), which could include incentives that will be crucial to the survival of the country's car and bakkie manufacturers who produce for export.
With the global shift to more planet-friendly cars, local manufacturers will soon need to switch from producing internal-combustion engine (ICE) vehicles to NEVs, which include hybrids and electric vehicles.
The local motor industry wants a policy to allow the country to produce NEVs for the local market and for export, as South Africa's main export markets — the UK and EU — aim to end the sale of ICE vehicles from 2035. Nearly 67% of locally produced vehicles are exported, with the UK and EU accounting for about 60% of that.
The motor industry has engaged with government on the issue since May 2021 and is hoping for a clear pronouncement on November 1, said Neale Hill, immediate past president of Naamsa at the opening day of the SA Auto Week conference in Midrand on Wednesday.
“The longer we delay, the longer we move to the back of the queue,” said Hill, who is also president of the Ford Motor Company of Southern Africa, which produces the Ranger bakkie for the local and export markets.
He echoed the sentiments of Volkswagen MD Martina Biene, who said South Africa's motor industry risks getting outflanked by countries such as Egypt and Ethiopia as local manufacturers continue to wait for the government's EV policy.
Speaking to Business Times at the weekend, Biene said: “Volkswagen has to prioritise countries globally, and because of a missing policy, SA 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.”
Apart from introducing manufacturing incentives, local carmakers want the government to reduce the 25% import duty on EVs to stimulate local demand for battery-powered vehicles. Due to their high prices, EVs still represent less than 1% of local car sales.
Billy Tom, Naamsa president and CEO of Isuzu Motors SA, told the Auto Week conference that NEV sales increased 421% from 896 units in 2021 to 4,764 units in 2022, but remain negligible as a percentage of new vehicle sales. Naamsa said with government, it wants EVs to account for 20% of South Africa's new-vehicle market by 2025 and 60% by 2035.
Developing local battery production was also important to support local content in South African exports to Europe, said Hill.
The government has missed previous opportunities to set an EV policy, most recently in February’s budget, but Naamsa CEO Mikel Mabasa was confident an announcement would be made on November 1 as the auto industry is a critical part of South Africa's economic landscape, contributing about 6% to GDP.
Currently, only two of the country's major vehicle manufacturers make NEVs. Toyota SA produces the Corolla Cross petrol-electric hybrid and Mercedes-Benz SA manufactures a C-Class plug-in hybrid.
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