Opinionista Roland Ngam 18 February 2021

Bye-bye Chitty Chitty Bang Bang, hello electric cars – Eskom and unions must climb on board

Workers need to be upskilled to get them ready for new electric car factory lines. New business models need to be drawn up, new infrastructure built, the Automotive Masterplan 2035 updated. Eskom must be transformed quickly to increase supply. Unions must get involved in the industry transformation.

Combustion engines are dead. This message was in President Cyril Ramaphosa’s State of the Nation Address, although you probably missed it.

In the section on investments in the motor manufacturing sector, right after talking about the R16-billion that Ford had invested in its Tshwane plant, he said this: “Toyota has invested in their KwaZulu-Natal facility to start production of the first generation of hybrid electric vehicles to come off a South African assembly line.” (my emphasis)

And so it begins. After more than 125 years of roaring success, internal combustion engine vehicles (ICEVs) are going to be phased out. Electric vehicle (EV) assembly lines are set to take over, in South Africa and in the rest of the world. In fact, they have already taken over elsewhere.

News on investments in EV production lines has been coming out at a furious pace over the last few weeks. The American Big Three (General Motors, Chrysler and Ford) are all going green. Between them, they plan to spend well over $70-billion on electric and autonomous driving technology over the next decade.

Fiat Chrysler, which invested $10.6-billion in 2018 on EV technologies and factory lines plans to have at least 60% of its sales come from EVs by January 2022.

On January 28 2021, General Motors announced that it intends to go all electric by 2035. That’s right: no ICEV will leave its plants after 2035.

One week later, Ford announced that it is investing $22-billion in EVs over the next five years. In preparation for its EV moves, Ford Motors acquired the EV manufacturer Rivian for $500-million in 2019.

The US’s Big Three must have been preparing for this eventuality for a long time. However, their decision was certainly precipitated by the Democrats’ trifecta of wins in the US (White House, Senate, House of Representatives), debates on the Green New Deal and the fact that 70% of Americans now accept that their government must do something about climate change.

Of course, there is also the fact that while sales of new US cars lag, Chinese, Japanese and European motor manufacturers have been smashing EV sales records out of the ballpark with models like the BAIC EC, the Nissan Leaf and the Renault Zoe. Nobody wants gas guzzlers any more.

So what does this mean for South Africa? Three things.

First, jobs. Motor manufacturers’ workforces are going to shrink. According to analysis done for NBC News by Paul Eisenstein, a typical combustion engine takes 6.2 hours on average to manufacture, while an electric vehicle cuts that down to about 3.7 hours because a lot of the process is automated. The South African motor industry employs more than 400,000 workers. All these jobs, including the component supply business, are at risk if we do not adapt to tomorrow’s business model today.

Ramaphosa’s announcement, cast in the light of investments by a major employer, is cause for the country to celebrate, especially in these very difficult times. After celebrating that news, we must adjust to EVs faster than had been anticipated when the Automotive Masterplan 2035 was drawn up.

Workers need to be upskilled to get them ready for new factory lines. New business models need to be drawn up, new infrastructure built, the Automotive Masterplan 2035 updated, etc. The masterplan says very little about electricity supply and the general value chain architecture that underpins EVs. Which brings me to my second point.

If nobody wants ICEVs any more (a bit of an exaggeration, but you get what I mean), South Africa must prepare its market for EVs if it is to achieve its ambition of controlling 1% of the motor manufacturing market, and here electricity supply comes into play.

Eskom must be transformed quickly to increase supply. More power companies need to be created to drive down prices. Government programmes should promote startups in EV-charging stations, and that can also go a long way towards promoting BEE transformation and job creation.

Operation Vulindlela must actively encourage the development of more democratically owned power stations to create price competition and spread opportunities.   

On to my final point: unions. The United Auto Workers union in the US launched a series of strike actions in 2019 when it realised that GM was planning to downsize. The union was expecting as many as 35,000 people to lose their jobs in the coming years. The same fears are playing out in Germany, where as many as 75,000 motor industry workers are expected to lose their jobs, even after the industry recently picked up 25,000 jobs.

A similar reality awaits South Africa’s auto workers, where the 2035 Automotive Masterplan was expecting the motor sector to add 16,000 jobs over the next few years. These jobs are not going to be sustainable in the long term.  

Unions cannot be bystanders and they cannot be reactive. They need to do research on the EV sector in countries like China and Germany where factories have changed a lot recently and they need to then feed that information into their advocacy in South Africa: training, redeployment, involvement in BEE schemes, new industry transformation, etc.

They must also influence the Eskom Social Compact in a manner that delivers more democratically owned and controlled green energy for South Africa as the country gets moving on its United Nations Framework Convention on Climate Change pledges. 

These challenges are certainly daunting, but they are also exciting. We are, after all, inventing the future. DM

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