South Africa’s draft New Energy Vehicle Green Paper is a step in the right direction

In 2019, we wrote an article sounding the alarm that South Africa’s inertia in pushing for electric vehicle adoption could cause it to miss the incredible opportunities offered by the electric vehicle revolution. The automotive assembly and automotive component manufacturing industry is one of the main pillars of the South African economy. South Africa-based assembly plants exported a record 387,092 vehicles in 2019, according to the automotive green paper released last week. The global economic slowdown induced by the coronavirus caused a sharp drop to 271,288 exported vehicles. This could be a temporary problem caused by a global pandemic, but a much bigger threat to this sector is already here and action is urgently needed. Apart from some Mercedes C-Class hybrid vehicles assembled in Port Elizabeth, the majority of vehicles exported from South Africa are ICE (internal combustion engine) vehicles.

Image courtesy of Breev South Africa

South Africa hosts assembly plants for BMW South Africa, Ford Motor Company of Southern Africa, Isuzu South Africa, Mercedes-Benz SA, Nissan South Africa, Toyota South Africa Motors and Volkswagen Group South Africa. These factories and associated downstream industries employ over 100,000 workers and contribute over 7% of GDP. In 2020, total auto export revenue was R175.7 billion, with 58% of that revenue coming from exports to the UK and the EU. The UK was the premier destination for South African assembled vehicles, and it recently banned the sale of new ICE vehicles until 2030!

South Africa therefore has only 9 years to prepare its industry for this. It could actually take a lot less time than that if the transition to electric mobility happened much faster than most people realize. The UK saw the plug-in electric vehicle market share at 13.25% in April 2021, with a full electric system at 6.5% despite recent cuts in the government subsidy for plug-in cars. With more all-electric models coming to this market, along with a policy supporting the adoption of electric vehicles by fleet operators and businesses, such as the In-Kind Benefit Tax (BIK) and sacrifice schemes. salary, the market share of ICE vehicles could fall much faster. Therefore, to protect and increase its share of vehicles exported to the UK, South Africa needs to accelerate the shift to the assembly and manufacture of electric vehicles and associated components.

Source: SA Green Paper on New Energy Vehicles.

South Africa’s Green Paper doesn’t just focus on battery-electric vehicles. He also advocates the adoption of hydrogen fuel cell vehicles and a green hydrogen economy (topics that we will ignore here). The Automotive Green Paper aims to address the key policy issues that will create and boost the production of electric vehicles and associated components locally while examining how to handle the delicate balance between completely disassembled kits for vehicles built in South Africa. and imports of vehicles completely built in South Africa. electric vehicles. The document also deals with the reduction of duties or their complete removal for EV components. The green paper is still open for comments and submissions close in early June.

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