Power cuts choking SA’s motor industry and electric vehicle rollout
EVs are among the products auto manufacturers would like to launch in South Africa — but the country is far from being an ideal environment.
Higher stages of blackouts are jeopardising efforts to grow SA’s motor industry, costing companies billions of rands in lost vehicle production and exports. Unrelenting power cuts are even deterring the motor industry from launching innovative products in the local market, such as electric vehicles (EVs).
The electricity crisis has been described by motoring industry players like Mikel Mabasa, CEO of the National Association of Automobile Manufacturers (Naamsa), as “the biggest inhibitor of growth”, stifling job creation and higher production levels and investment.
While major vehicle manufacturers have pressed ahead with the installation of solar panels at their factories, they are not fully immune to the negative effects of blackouts.
For instance, the Volkswagen Group South Africa (VWSA) has a factory in Kariega in the Eastern Cape, producing 680 vehicles per day, including the Polo and Polo Vivo. VWSA chairperson and managing director, Martina Biene, said the factory is not based in an area considered a special economic zone by the government (areas designated for large-scale economic activity), meaning that it is not exempt from the negative effects of power cuts.
“We have had to close our plant during higher stages of load shedding. We are not in the special economic zone. So, we have had to close our plant when we were in Stage 5 or 6,” said Biene, during a panel discussion about SA’s transition to electric vehicles hosted by Naamsa on Wednesday.
“During higher stages of load shedding, we don’t produce vehicles and lose revenue. We send our 2,800 workers home, and we lose shifts. This means no work, no pay for our workers,” said Biene.
She said this is not an ideal environment for VWSA to convince its global partners to launch innovative vehicle products in SA.
Rolling blackouts are adding another layer of complexity in convincing consumers to move away from the traditional internal combustion engine vehicle and to explore emission-free alternatives.
Suppliers of components to vehicle manufacturers are also hard-hit by blackouts. One late delivery by a supplier can interrupt the entire manufacturing chain.
“Our weakest link is our supplier base,” said Andreas Brand, CEO of Mercedes-Benz SA. He said his company’s supplier base is not only negatively impacted by rolling blackouts, but also by the poor quality of electricity supply.
“There are peaks and dips in electricity supply, suggesting the poor quality of electricity. Even if the electricity is constantly delivered, the supply that you get dips and peaks. This damages equipment at a factory level,” Brand told Business Maverick.
Mercedes-Benz SA’s vehicle manufacturing facility in the Eastern Cape was impacted by rolling blackouts, resulting in a complete halt in production due to higher stages. Now, the company has installed more than 2MW of solar power at the factory.
“That alone gets us to a space where we significantly reduce our demand from the grid,” said Brand, adding that the plan is for Mercedes-Benz SA to install more solar panels and double the energy it produces — but only if battery storage options become widely available and affordable.
On electric vehicles, Brand said the next focus for Mercedes-Benz SA will be to not only roll out its series of EVs (named Mercedes-EQ), but also expand infrastructure that allows motorists to charge their vehicles.
“We are seeing a move into the space of people charging at home and charging at the places of employers,” said Brand.
For now, Mercedes-Benz SA’s offerings will be battery-electric vehicles (BEV) reliant on regular, plug-in recharging. Other manufacturers are investing in hybrid vehicles that use two motors — one electric and the other an internal combustion engine.
Recent data collected by Naamsa shows that 3,092 new EVs were sold in SA in the first three quarters of 2022, compared with 896 during the same period in 2021. There is a sense that SA could produce and sell more EVs if Eskom does what it’s meant to do.
SA has what it takes to produce EVs, said Toyota SA president, Andrew Kirby: “We already have the skills from an assembly point of view. There are challenges with deepening the supply chain and selling EVs, but skills are not one of them,” said Kirby.
But SA is lagging behind when it comes to EV technology, including battery storage, power electronics and inverters.
“We don’t have these industries in SA, but we are partnering with international suppliers,” said Kirby.
SA’s motoring industry relies on Transnet’s rail and port operations to export vehicles manufactured in the country. But failures at Transnet are hobbling export activity.
“We have an installed capacity of 200,000 vehicles – 60% of which are exported. If we don’t have the infrastructure to get them out, then we are losing the investment,” said Neale Hill, president of Ford Africa.
About two-thirds of vehicles made in SA are exported, mostly to countries that will ban petrol and diesel-driven vehicles in the next few years in favour of EVs. The SA government has been tardy — in policy and spirit — to encourage the local assembly of EVs. DM/BM