Business Maverick


Electric vehicles: SA motoring industry fights for relevance

Electric vehicles: SA motoring industry fights for relevance
Employees fix the seats of a Volkswagen AG (VW) ID.5 electric sports utility vehicle (eSUV) on the assembly line at the automaker's electric automobile plant in Zwickau, Germany, on Tuesday, April 26, 2022.(Photo: Krisztian Bocsi / Bloomberg)

The world is motoring towards electric vehicle (EV) rollout but South Africa is walking into a crisis as our biggest market, the EU, has outgrown our love of fossil fuels.

South Africa’s automotive sector is at risk of being consigned to oblivion if it is unable to compete on an international scale.

And competition is hotting up.

On 14 February, the European Parliament finally gave formal approval to ban all internal combustion vehicles by 2035. Key vehicle manufacturers such as Mercedes-Benz, Volkswagen and BMW are on track to phase out internal combustion engine (ICE) vehicles, to stem car emissions.

By 2030, the US expects to have an electric vehicle (EV) charging network of half a million stations across the country, through an ambitious $7.5-billion, federally funded programme.

China, the world’s largest car market, not only increased sales of vehicles by 61% last year, but its companies are innovating faster, which is potentially accelerating the transition off fossil-fuel powered transport and putting it on track to displace Japan as the biggest exporter. The country’s Association of Automobile Manufacturers expects sales of EVs and plug-in hybrids to surge by 35% in 2023 to nine million vehicles, which is almost a third of China’s total new vehicle sales.


SA’s local automotive sector has now released a thought leadership discussion document on new-energy vehicles (NEVs), to remain globally competitive.

Naamsa CEO Mikel Mabasa says the industry understands and appreciates that the introduction of NEVs is not just about replacing the traditional ICE with new technologies, but also about the role the industry plays in decarbonising road transport in achieving carbon neutrality by 2050.

“The global transition towards NEVs is a critical step to secure the future of the automotive industry in South Africa. Our rapid adoption to newer technologies is critical for the domestic automotive industry’s long-term success and growth.

“The only way to have a successful automotive manufacturing base is to keep up with technological developments.”

He said that “the South African automotive industry cannot be running on one development technology track whilst the rest of the world is way ahead on the same track”.

“If we want to remain globally competitive, we have no option but to play with the big global players who are leading the NEV charge.”

Government ‘painfully slow’

However, on the government front, SA has been “painfully slow” in finalising its governance and policy transformation priorities.

“We need to urgently enhance existing auto policies to facilitate a high-yielding business environment, including developing an attractive fiscal and regulatory framework that makes South Africa a highly competitive and compelling location for NEV production.”

The South African National Greenhouse Gas Inventory has identified the transport sector as the fastest-growing source of greenhouse gas emissions, accounting for around 10.8% of national emissions. Aviation emissions account for 5%; maritime 2.2%; rail 1.6% and direct emissions from the road sector account for 91.2%, mainly from the combustion of petrol and diesel.

The automotive industry is planning to invest $515-billion globally by 2030 to help facilitate the transition to an NEV future (which includes battery, plug-in hybrid and fuel cell electric vehicles) while continuing to innovate on the broad array of powertrain technologies to meet global market needs.

SA needs the flexibility to adopt multiple technologies and policies best suited to its unique socioeconomic realities, Naamsa says, including current pressures on the national fiscus; our geographical location; persistent socioeconomic problems; slow economic growth trajectory and geopolitical considerations within the region and across Africa.

To support the transition of the SA automotive industry to an NEV-dominated market, the automotive industry has called on the government to:

  1. Commit to reducing CO2 emissions across the entire auto value chain as soon as it is practically possible. Although NEVs do not emit CO2 while in use, CO2 is emitted during the manufacture, distribution, recycling and disposal process.
  2. Ensure that the manufacturing base in SA is protected, strengthened and retained, given that the country is at risk of losing more than 50% of its production volume from July 2025 [on instruction of Euro 7 emission regulations in Europe] to 2035 [when ICE drivetrains in almost all the European countries will be banned];
  3. Introduce NEV purchasing subsidies;
  4. Align NEV import tariffs from the EU and the UK from 25% to 18%;
  5. Provide a 50% rebate on the import of specified NEV components for a limited period;
  6. Increase in the Automotive Investment Scheme (AIS) for NEV investment from 30% for OEMs and 35% for component suppliers to 50% and expand the AIS offering for NEV investment to lower tier suppliers, including suppliers that conduct raw material beneficiation, and
  7. Encourage NEV investment into SA and support export competitiveness while the economies of scale are low.


On 18 May 2021, the Department of Trade, Industry and Competition (DTIC) published a Green Paper on the Advance­ment of New Energy Vehicles, after extensive industry consultations and with an undertaking to issue a White Paper by the end of the year.

The paper explores support and infrastructure investment needed to encourage NEV uptake within the context of wider economic recovery efforts through market stimulus and supply chain support measures.

It also looks at an investment and tax system to build a resilient raw material supply chain to support the country’s efforts to be a global player in NEV manufacturing, as well as how to retain preferential access to major trading partners to allow the country to maintain global competitiveness and foster innovation.

The White Paper, which the DTIC promised to deliver by year-end, has still not been issued.

The automotive industry believes its thought leadership on EVs will help support and strengthen SA’s long-term strategy towards NEVs.

Citing the president’s State of the Nation Address earlier this month, Mabaso says they were eagerly waiting for the National Budget Speech announcement to inform the NEV Roadmap, saying once there was a clear policy directive and commitment from the government, OEMs would be able to act quickly and the DTIC could finalise an NEV White Paper without further delays.

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NEVs were performing well under the circumstances: sales showed a 431.7% year-on-year increase from 896 units in 2021 to 4,764 units in 2022, but still remain negligible as a percentage of total new vehicle sales.

The Naamsa document suggests that consumers are becoming more educated about the technology and want newer technology vehicles – but at a “modest price”.

The cheapest EV on the market is the Mini Cooper SE (at R750,000). Haval’s Ora, which is expected to sell for about R600,000, arrives on our shores in Q4 of 2023. In the eyes of the average South African consumer, that’s still not exactly a “budget” offering.

Mabaso says despite lower running costs, the high upfront purchasing cost of NEVs has been the main deterrent to increased NEV uptake in South Africa, exacerbated by high taxes, including VAT; the ad valorem excise duty (which is based on a sliding scale up to 30%), and the import tariff.

Add to this the limited product availability, range anxiety, security of electricity supply and a limited understanding of the technology, and the average SA car buyer is unlikely to be able to afford an EV.

Compared to their ICE equivalents, the international pricing gap for NEV models is 12% for hybrids, 43% for plug-in hybrids and 52% for battery-electric vehicles. BM/DM


Comments - Please in order to comment.

  • Alan Cargill says:

    What does not seem to be discussed alongside EVs is the import cost of petrol and diesel. SA imports 85% of all these products, either as crude oil or finished products. The cost of these products is close to R1bn per day. Reducing these costs should be seen as a key priority to assist with our balance of payments deficit. This can be done by switching to electric vehicles and renewable energy.

  • Alan Cargill says:

    Using the term NEV feels like a half hearted approach that is in danger of missing the point. Hybrids are a dying breed in more advanced markets and fuel cell cars will never compete. Hydrogen will never be a fuel for private vehicles. Any policy decisions should be clear and unequivocal on all these points less we continue on the wrong path to the future.

  • Alan Cargill says:

    Should SA be leveraging our BRICS relationship with China to encourage Chinese EV manufacturers to set up shop here? I see precious few other benefits stemming from BRICS, but surely this could be one.

  • Jane Crankshaw says:

    Looking at the numbers here – the biggest growth seems to be in “Traditional Hybrid” vehicles proving Toyota’s strategy as the correct one for SA. Now all we have to do is convert all the Toyota Hi Ace taxis to Hybrid technology – not sure if the gangster Taxi Associations will comply! Yet another cost to taxpayers???

  • Alan Wassung says:

    Alan Cargill is absolutely correct about the cost of imported crude and or finished product and its effect on the balance of payment deficit. In addition, I would have thought that the OEM assembly plants in SA would have themselves, initiated a transition to electric vehicle assembly, given the vast amounts they have invested in their plants here already. Locally assembled EV’s would become more affordable to the public and further entrench the longevity of the workforce and the relevance of their brands.

  • Geoff Hainebach Hainebach says:

    Reference to the size of the investments being made by the major automotive manufacturers in retooling their plants for conversion to electric vehicles and the relatively small size of our vehicle market may indicate that investment in retooling South African plants may be hard to justify.

    Large parts of the world and particularly Africa may retain ICE vehicles for many decades yet as the low density of their markets and difficult access to capital may make developing the new infrastructure very expensive. Should the South African Motor Industry not rather take advantage of the fact that they already have all the skills and the tools to build the vehicles required for these markets?

  • Deon Botha-Richards says:

    Whilst we definitely need to transition so that we can maintain exports to countries that will only allow NEV’s the challenges of using electric vehicles in South Africa are great.

    The public charging network is way too small, especially for longer trips. The cost of charging at a public station basically evens the running cost out with efficient diesel.

    And charging at home if one does high mileage is practically impossible.

    SA is not ready for widespread electric vehicle usage.

    And hybrids, whilst great are not that good for long distances like taxi’s.

  • Dave Martin says:

    Alan Cargill, I used to agree with you that Hybrids were a dying technology. But recently I’ve realised that I’m much more likely to buy a plug in hybrid than a full electric in the next five years. If you can get 80km on the battery (e.g. RAV4 hybrid) then that would cover me for 90% of my daily travel. For longer trips, there are just not enough fast chargers on the N2 in the Eastern Cape so I’d be stuck. So having a petrol option for those long journeys would be very helpful.

  • Barrie Lewis says:

    It’s a disgrace that only about 1000 battery electric vehicles have been sold in the last five years. Nearly 50% of the list price is tax; the state views them as luxury vehicles and is desperate to keep them out of SA; they will lose out on the fuel levy.
    The woes at Eskom is no doubt part of the reason for the foot dragging, a hallmark of this government. Thought should be given to a rebate for those buyers with proven solar, wind or water turbine sources of energy.

  • Barrie Lewis says:

    Only a small proportion drive more than 100km/ day. Easily covered by even old technology Nissan Leafs, a breeze for new BEVs. Perfect for the second round the block car.

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