South Africa’s draft Green Paper on New Energy Vehicles is a step in the right direction
In 2019 we wrote an article that set off the alarm that South Africa’s sluggishness in incentivizing the adoption of electric vehicles could result in missing out on the incredible opportunities offered by the electric vehicle revolution. The automotive assembly and component manufacturing industry is one of the main pillars of the South African economy. Assembly plants based in South Africa exported a record 387,092 vehicles in 2019 Auto green paper released last week. The slowdown in the global economy caused by coronavirus led to a sharp drop to 271,288 vehicles exported. This could be a temporary glitch caused by a global pandemic, but a much bigger threat to this industry is already in place and urgent action is needed. Except for a few Mercedes C-Class hybrid vehicles assembled in Port Elizabeth, most of the vehicles exported from South Africa are ICE (internal combustion engine) vehicles.
In South Africa there are assembly plants for BMW South Africa, the Ford Motor Company in southern Africa, Isuzu South Africa, Mercedes-Benz SA, Nissan South Africa, Toyota South Africa Motors and the Volkswagen Group South Africa. These factories and their associated downstream industries employ over 100,000 workers and contribute over 7% of GDP. In 2020 the total export revenue for motor vehicles was R 175.7 billion, and 58% of this revenue came from exports to the UK and the European Union. Great Britain was the top destination for vehicles assembled in South Africa Recently, the sale of new ICE vehicles was banned until 2030!
South Africa therefore only has 9 years to prepare its industry for this. It might actually take a lot less time than this if the transition to electric mobility is happening much faster than most people think. In the UK, the market share of plug-in electric vehicles was 13.25% in April 2021, while electrics was at a healthy 6.5% despite recent cuts in the government subsidy for plug-in cars. With all-electric models coming to this market soon, and with the introduction of electric vehicles being supported by fleet operators and businesses, such as the In-Kind Tax (BIK) and a system of sacrificing salaries, the market share for ICE vehicles could decline much faster. Therefore, in order to protect and increase its share of vehicles exported to the UK, South Africa needs to accelerate the transition to assembling and manufacturing electric vehicles and related components.
The South African Green Paper does not only focus on battery electric vehicles. It also advocates the introduction of hydrogen fuel cell vehicles and a green hydrogen economy (issues that we will ignore here). The Auto Green Paper aims to address key policy issues that encourage and stimulate local production of electric vehicles and related components, while also examining how the delicate balance between fully disassembled kits for vehicles built in South Africa and imports of fully built vehicles is electric vehicles. This article also discusses reducing or removing tasks for EV components. The green paper is still open for comments and submissions, which will be finalized in early June.