Join the electric car wave or get left behind, Ramaphosa urges automotive sector

President Cyril Ramaphosa urged the South African car sector to be proactive in participating in the global clean energy revolution or risk getting “left behind” as the world weaned itself off internal combustion engines and carbon-intensive goods.

Ramaphosa was addressing Auto Week in Cape Town on Thursday. The event coincided with the centenary of the South African car industry but also came during a challenging period as the world’s vehicle demand was shifting towards electric and hybrid vehicles.

Ramaphosa said the industry faced major challenges in light of the global energy transition to decarbonisation in the search for cleaner and more sustainable fuels.

Constrained markets put the industry in a vulnerable position but also presented opportunities, he said.

“Even as we celebrate achievements of the past 100 years, the industry faces considerable headwinds. Like all manufacturing, the car industry was hit hard by Covid-19, global tensions and international conflicts have also disrupted supply chains.

“The global transition towards decarbonisation presents a fundamental challenge to the industry. The transition towards cleaner and more sustainable fuels with stringent regulations in key markets put a number of automotive firms and sub-industries in vulnerable positions,” said Ramaphosa.

His remarks called to mind trade policies, including the EU's Carbon Border Adjustment Mechanism (CBAM) which will come into effect in 2026. It proposes a tax on carbon-intensive exports such as aluminium, steel and fertiliser and seeks to achieve net zero by 2050.

The trade, industry and competition department has been central in challenging the CBAM at the World Trade Organisation and lobbying counterparts in the Brics bloc to agitate for a political solution.

Ramaphosa said the local automotive sector should see these challenges as an opportunity to modernise.

“The local automotive sector needs to position itself to take advantage of the demand for electric vehicles (EVs), new energy vehicles and sustainable fuels.”

Ramaphosa said the transition to cleaner, more sustainable practices in the automotive industry was a priority for the government and the industry played a critical role in helping South Africa achieve its climate targets.

“We are committed to working hand-in-hand with the private sector to promote the production of new energy vehicles and the development of infrastructure to support them.

“As many of our major trading partners rapidly shift towards EVs it is also imperative that we remain part of this global supply chain. If we don’t, we will be left behind.”

He said the government was committed to reforming the freight sector, refurbishing the country’s logistics network, and developing a comprehensive EV policy with tax incentives for manufacturers and consumers to support the growth of EVs locally.

Business Times