SA motor bosses welcome Ramaphosa’s plan to make EVs cheaper

South African motor industry bosses welcomed President Cyril Ramaphosa’s announcement that government would incentivise the production of new energy vehicles (NEVs) in the country and introduce measures to make green vehicles cheaper for consumers.

Speaking at the Auto Week conference in Cape Town on Thursday, Ramaphosa said the NEV white paper released in December 2023, which set out government policy goals to support the transition to cleaner cars, will not exclude hybrids and plug-in hybrids and will have subsidies to accelerate consumer uptake of electric vehicles.

Though he did not provide a timeframe or say what form the subsidies would take, it is speculated ad valorem duties on electric vehicles (EVs) might be reduced to make them more affordable. At present battery-powered cars are more expensive than cars powered by internal combustion engines, which along with a limited charging network and load-shedding, has contributed to very slow consumer adoption of EVs in the country.

In 2023 sales of pure electric vehicles increased 85.4% from 502 to 931 units year to year as more EV models were introduced, but this accounted for only 0.17% of the 532,098 new cars sold in South Africa last year.

Local car producers on Friday hailed the president’s comments as positive for the motor industry and consumers.

“The president’s recognition of the automotive industry as a key pillar of South Africa's economy, alongside his commitment to advancing the sector through transformative and sustainable policies, resonates deeply with Naamsa and with all our member companies,” said Billy Tom, president of motor industry umbrella body Naamsa.

“The inclusion of alternative vehicle technologies such as hybrids and plug-in hybrids, and very importantly, alongside incentives for manufacturers and subsidies for consumers, is a crucial step towards the widespread adoption of cleaner, more sustainable vehicles. The measures will ensure South Africa remains part of the global supply chain as major trading partners shift towards EVs. ”

Government incentives aim to help ensure the survival of SA’s seven car manufacturers, who export two-thirds of their production into a global market that is moving towards an electric future. To reduce air pollution, the EU seeks to ban the sale of internal combustion engine (ICE) cars by 2035.

“As the president highlighted, the global transition towards decarbonisation presents challenges but also immense opportunities for the South African automotive sector. Naamsa is fully aligned with the need to embrace NEVs and sustainable fuel technologies,” said Tom, who is also CEO of Isuzu Motors South Africa.

He also welcomed government’s initiatives to include critical mineral beneficiation for NEV production, including batteries and green hydrogen fuel cells, which positioned the local motor industry to capitalise on emerging industrialisation opportunities.

He said Africa’s vast mineral resources for energy transition were underutilised, and panellists at the conference urged the continent to focus on green industrialisation and battery production to reduce reliance on exporting raw materials.

With infrastructure challenges and competition for raw materials, panellists emphasised Africa must strategically develop parts of the battery value chain, and look to develop allied opportunities such as fixed energy storage to create economies of scale to support localisation.  

At the conference there was a call to support the adoption of cleaner fuels from July 1 2027 as the sector could not support additional delays, said Tom. While the rest of the world operates with Euro 5 or 6 emissions standards, SA operates with Euro 2 standards, which means engines in modern cars often need to be modified to run on local fuel.

“Further delays on the introduction of improved fuel specifications, compounded by existing adulteration and contamination of fuel, would have a long-term impact on the ability of original equipment manufacturers to introduce improved vehicle technology and also present a significant risk to consumer safety,” said Tom.

Naamsa and Transnet on Friday signed a memorandum of understanding to mitigate challenges in the supply of vehicles and components, such as the bottlenecks at SA ports. A Naamsa and Transnet Auto “war room” will be set up for the sharing of data and implementing initiatives for rail performance, slot capacity and rolling stock availability.