Africa is poised to become a cornerstone of the New Energy Vehicle (NEV) manufacturing landscape, thanks to its rich reserves of vital raw materials such as copper, cobalt, lithium, and bauxite. Replacing the traditional Internal Combustion Engines (ICE) vehicles with electric vehicles is a major part of the effort to reduce greenhouse gas emissions from the transportation sector. Current designs for electric vehicle batteries require the abovementioned raw materials for manufacturing. 

These resources position the continent as a key player in the global automotive ecosystem. Beyond its natural wealth, Africa boasts advantages like increasing urbanisation, a relatively affordable labour force, and a youthful workforce eager to drive innovation. Countries like South Africa (SA), Morocco, and Egypt are making strides in infrastructure development, further enhancing the continent’s appeal. For Original Equipment Manufacturers (OEMs), Africa’s proximity to essential raw materials and its dynamic labour market presents a significant competitive edge, fostering cost efficiencies, supply chain reliability, agility, and a commitment to environmental sustainability.

Manufacturing in the continent is not devoid of major challenges, which are well documented, namely political instability, corruption, poor infrastructure, poor education etc. However, these challenges are not insurmountable and African countries like Seychelles, Mauritius, Egypt, and SA have proven that it is possible to build developed states in the continent when countries focus on the right things.

The African automotive market is estimated at ZAR 385 billion, which is minuscule when compared to the Global Market Size of ZAR 64 trillion. Thus, the continent is geared for local manufacturing for exports as opposed to local consumption, which bodes well for the balance of trade for the region. Various African countries have identified the automotive sector as a strategic growth sector for their countries, with the top three being Morocco, ranked first on the continent’s car export at ZAR 121 billion, followed by SA at ZAR 102 billion and Djibouti at ZAR 6.3 billion. It is interesting to note the strategic location of these countries, i.e., Morrocco at the North, literally next door to Europe, SA at the southern tip of the continent and Djibouti at the Eastern horn of the continent.  Each of these locations provide strategic logistical advantages for their country’s automotive market. 

SA was the automotive hub of the continent until it was superseded by Morrocco in 2024, as per research reported by Statista. The North African country has managed to grow its exports due to low production cost and proximity to Europe. Further, the country has substantial phosphate resources, accounting for 70% of world deposits as stated in the report. Phosphate is essential for paint adhesion and corrosion prevention. Notwithstanding the above, South Africa’s regress as the leading exporter is “self-inflicted” as opposed to being outwitted by Morrocco. 

In the main, the decline of the SA automotive industry can be attributed to the following factors: 

• Worsening industrial logistical networks: The most economical form of transport for cars and automotive components is rail. South Africa’s rail network has been derelict and rendered dysfunctional.
• Energy challenges: Load shedding has had dire consequences on the economy of the country and the automotive sector has not been spared. 
• Uncertainty in incentives and high taxation:  Government incentives are key drivers of the sector and Morrocco is literally “rolling out the red carpet” for both OEMs and suppliers with free trade agreements with China, the United States and Europe, while SA faces an uncertain future with the APDP-2 and the excessive ad valorem tax decreasing the local demand of vehicles.
• Poor agility: The sector, while being the most developed, is stagnant and fails to adapt quickly to changing market conditions. For example, according to an article published by NAAMSA, South Africa generates about 70% of its automotive export value from exports to Europe, yet 40% of the exports consists of catalytic convertors, a technology which is quickly becoming obsolete with the introduction of NEVs. It is telling that South Africa only published the EV white paper in December 2023, which is extremely late compared to the rest of the world. 
• Uncoordinated sector: The lack of coordination, national strategy and internal competition within South Africa are significant challenges that hinder growth and undermine investment attraction to the country. As small as the country is, there is relentless competition amongst regions and provinces. Gauteng, Kwa-Zulu Natal, and the Eastern Cape are in fierce competition for OEM attraction. Even more comical is the competition between the Coega Special Economic Zone (SEZ) and East London Industrial Zone for OEMs, even though both SEZs are in the same province. The unhealthy competition is a “race to the bottom” as investors are quick to exploit this through “horse trading” for the best deals. 

South Africa has the necessary tools and resources to reverse the decline and reclaim its rightful place as the automotive hub of the continent. The solutions reside in government’s deliberate efforts in creating an enabling environment for the sector to thrive through policy certainty, attractive incentive schemes and infrastructure development. Most importantly, government and industry stakeholders must collaborate and craft a national automotive masterplan for the country that will identify each region’s geographical logistical strengths and encourage collaborations within the regions for the national benefit and adopt a South African Inc. mindset when pursuing foreign direct investors. 

In conclusion, as SA stands at the crossroads of a new automotive era characterised by battery electric vehicles, the country must act decisively to secure its place in the global landscape. By addressing the internal challenges of competition and coordination, and by fostering a collaborative environment, South Africa can reclaim its status as the continent's automotive hub. The clock is ticking, and the time for action is now.