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 indolence in incentivising the adoption of electric vehicles could lead to the incredible opportunities offered by the electric vehicle revolution being missed. The automotive industry for the assembly and manufacture of automotive components is one of the most important pillars of the South African economy. The South African-based assembly plant exported a record 387,092 vehicles in 2019, according to the Auto Green Paper published 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. Apart from 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.

Image courtesy Breev South Africa

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 assembled South African vehicles Recently the sale of new ICE vehicles was banned until 2030!

South Africa therefore only has 9 years to prepare its industry for it. 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. As all-electric models will soon be available in this market and the introduction of electric vehicles will be supported by fleet operators and companies, 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.

Source: SA Green Paper on New Energy Vehicles.

The South African Green Paper does not only focus on battery electric vehicles. It also advocates the introduction of hydrogen fuel cell vehicles and an environmentally friendly 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 to deal with 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.

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