The export of motor vehicles, which represents 60% of vehicle production in South Africa, has challenged the government to provide clear guidance on the future implementation of an infrastructure for the extensive production and use of new energy vehicles (NEVs).
From a local perspective, it is expected that NEV rollout will add impetus for local manufacturers to gear up for new-generation vehicles.
The Automotive Business Council (naamsa*) stated that the lead-up to an NEV policy announcement has been long in coming and has made it difficult to sustain and grow the automotive industry in South Africa.
“While we are disappointed that the minister has decided to postpone the NEV policy announcement until February next year, naamsa is pleased to hear that National Treasury plans to implement tax and expenditure measures to support the industry’s transition to NEVs,” said naamsa CEO, Mikel Mabasa.
“We expected more from the minister (Enoch Godongwana) after numerous engagements we had on this topic leading to the (medium-term) budget announcement.
“The government understands our challenges as a vehicle-producing country with bigger ambitions to grow our global influence as we move to NEVs.
“Effectively, the minister has bought himself more time to announce details for NEV policy, which will now be during the 2024 Budget Review.”
What is eagerly awaited from the government, Mabasa said, are announcements on considerations for domestic market demand stimulus measures, the establishment of renewable energy-based charging infrastructure and production support.
He added that South Africa has procrastinated far too long, and that naamsa believes the NEV policy pronouncement should be made by President Cyril Ramaphosa during his State of the Nation Address in February.
Mabasa said this should be supported by fiscal measures the Minister of Finance promised to announce in the 2024 National Budget Review.
“This is crunch time for the South African automotive industry, and we can no longer afford to be silent on policy choices the country should make about the future of this important sector.”
Mabasa said the economic strength of the local auto sector cannot be underestimated nor downplayed.
He said from 1995 to 2022, vehicles exported from South Africa to 152 different markets around the world totalled 5 641 644 units with an export value of R1.55 trillion.
Additionally, automotive component exports amounted to R892.6 billion. Last year, automotive export value amounted to R227.3 billion, which consisted of a record R157 billion for vehicle exports and a record R70.3 billion in component exports.
As one of the most visible sectors attracting foreign direct investments, vehicle and component sector investment in 2022 amounted to R11.6 billion.
Consumer interest in NEV products in the South African market is gaining some welcome traction.
In 2022, total NEV sales reflected a significant year-on-year increase of 421.7%, at 4 764 units from 896 in 2021.
Sales of battery electric vehicles breached the 500 units per year mark for the first time, with sales of 502 units last year.
“It is our considered view that clearly articulated government support intervention would undoubtedly go a long way in stimulating more demand. It will also accelerate investment and much greater interest in NEV technology and solutions,” Mabasa said.
Based on new vehicle sales records released by naamsa last week, year-to-date [YTD] September total NEVs increased by 67.0% year-on-year, at 5 165 units. The September 2023 YTD total for NEV production increased by 112.4% to 5 670 units, and NEV imports increased by 179.7%, recorded at 3 393 compared to the same period last year.
Passenger and extra heavy commercial NEV production increased by 382.3%, and passenger traditional hybrid production by 10.2%.
While total NEV sales remain negligible as a percentage of total new vehicle sales, the NEV policy finalisation will give the industry a much-needed injection of confidence as an export-oriented industry that exports 60% of its vehicles.
- National Association of Automobile Manufacturers of SA.
