There is an opportunity to bring battery electric vehicle and plug-in hybrid electric vehicle production to South Africa, without first developing a domestic market and charging infrastructure for these vehicles, says Trade and Industry Minister Ebrahim Patel.

Addressing the National Association of Automobile Manufacturers of South Africa (Naamsa) conference held in Midrand on Thursday, Patel said producing these vehicles in South Africa was "not necessarily" based on South Africa first developing a base of electric vehicle (EV) consumption, along with “all the necessary infrastructure”.

Current domestic EV sales were just short of 150 vehicles in 2018, with the peak in 2016 at about 250 vehicles.

EVs are projected to make up around 50% of all global new light-duty vehicle sales by 2040, up from 3% in 2020 and a projected 11% in 2025.

Patel acknowledged that there was “quite a profound shift” happening from the internal combustion engine to new technology vehicles, noting that the South African auto industry had to develop the local capabilities to produce the vehicles of the future.

“We should not build the industry of the past in a world that is changing fast.”

He added that South Africa was endowed with the resources required for lithium-ion and fuel cell production, including platinum, palladium, nickel-sulphate and vanadium.

SLOW TRANSFORMATION
Patel noted that government had a strong focus on promoting inclusion in the South African automotive sector, with the current pace of transformation “unbearingly slow”.

“[Transformation] is a national project. It is not a nice to have, it is not a tick-box exercise. It is a critical imperative to the success and sustainability of the industry.”

Patel said government aimed to transform the automotive sector through the acceleration of the employment of black South Africans. This included the upskilling of employees, empowerment at dealerships, as well as substantially increasing the number of black component suppliers in the supply chain.

“We must also bring young South Africans into the supply chain. Young black South Africans and young white South Africans.

Patel said he would “soon engage” automotive industry leaders on the establishment and finalisation of an automotive transformation fund, which would serve as a key instrument to bring new, black industrialists into the sector.

This fund would receive money from South Africa’s seven large vehicle manufacturers, and would be valued at around R4-billion, noted Naamsa president Andrew Kirby.

“We need to change our market structure both through industrial funding and through competition policy,” added Patel.

He said his department last month promulgated new sections to the Competition Act.

“One of the things it will do is to enable greater cooperation and coordination by larger players, without falling foul of the Competition Act, if [their actions] are aimed at increasing exports and economic inclusion.”

TSHWANE TO GET SPECIAL ECONOMIC ZONE
Patel said on Thursday that Tshwane should soon host a special economic zone (SEZ).

This SEZ will focus on the automotive industry supply industry specifically, and will cover the size of 200 soccer fields.

“Its intent is to support the improved competitiveness of vehicles assembled in South Africa.”