The first electric vehicle (EV) in South Africa will probably be produced by the auto sector in 2026, the trade minister stated on Monday when outlining plans for the nation’s transition to green transportation.
One of the main tenets of South Africa’s Just Energy Transition (JET) strategy for a low-carbon and climate-resilient economy is the electrification of transportation.
According to the JET plan, the transportation sector would need to invest 128.1 billion rand ($6.84 billion) between 2023 and 2027 in order to significantly contribute to South Africa’s decarbonization goals.
Among other major names, South Africa is home to the largest automotive manufacturing cluster in Africa, which includes Mercedes, Toyota, Isuzu, and Volkswagen.
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Additionally, it is heavily interwoven into the global supply chain, sourcing parts from all over the world and selling the finished product to over 150 nations.
“We’re already producing hybrids but we anticipate that the first electric vehicles are likely to be produced already by 2026,” Minister of Trade, Industry and Competition Ebrahim Patel said.
The first supply of EVs will be restricted, according to conversations his agency was holding with the automakers. Then, he said, without mentioning any companies, growth should pick up speed between 2026 and 2030, with only one manufacturer planning to start producing battery-electric vehicles beyond that year.
The government outlined measures to facilitate the transition in a 68-page plan on electric vehicles (EVs), including government incentives, a temporary lowering of import duties for batteries used in domestically produced and sold vehicles, and the commercialization of green hydrogen production as a sustainable fuel source.
South Africa’s achievements
There’s a valid justification for South Africa to be proud of its auto sector. It is very beneficial to the nation’s trade balance. About 15% of South Africa’s total exports—worth ZAR175 billion in 2020—come from the export of two-thirds of the cars the company produces. However, the global transition from internal combustion engines (ICEs) to more environmentally friendly new energy vehicles poses a danger to this robust industry (NEVs).
The European Union is by far the largest automobile market in South Africa. Of South Africa’s automobile exports, 73% are shipped to Europe, 11% to Asia, and 6% to Africa.
The challenges
South Africa has also faced some challenges in this sector. The problem lies in the fact that Europe has decided to completely phase out the sale of new gasoline and diesel automobiles, with a deadline of 2035.
It may seem far off, however, a few European nations have advanced the date. In 2021 the UK declared that the deadline had been moved up to 2030. The prohibition will be implemented as early as 2025 in Norway, a nation leading the world in the percentage of new electric cars sold (65%) as of 2022.
There is every reason to believe that the deadline will also be advanced by other significant Western European economies. The European Automobile Manufacturers Association is among many who have expressed concern that the new Euro 7 emissions regulations, which are scheduled to take effect in 2025, “could kill off internal combustion engine cars by 2026.”
The key takeaway is that a significant change in South Africa’s primary export market for automobiles is important. For the first time ever, conventional diesel engine vehicles were outsold by zero-emission vehicles in September 2021 in Europe. The worldwide semiconductor shortage may be the cause of this oddity, but policymakers in South Africa should take note of this and prepare for the possibility that they will soon have to play catch up.