Motor industry looks to November 1 for government EV policy

Is SA finally ready for the big plug in? The future of the country’s automotive industry could be decided on November 1 when finance minister Enoch Godongwana delivers his medium-term budget policy statement in parliament.

After extensive lobbying by the motor industry, government is finally expected to reveal its long-awaited policy on new-energy vehicles (NEVs), which could include incentives that will be crucial to the survival of SA’s car and bakkie manufacturers who produce for export. 

With the global shift to more planet-friendly cars, local manufacturers will soon need to switch from producing internal-combustion engine (ICE) vehicles to NEVs, which include hybrids and electric vehicles.

The local motor industry wants a policy to allow the country to produce NEVs for the local market as well as for export, as SA’s main export markets — the UK and EU — aim to end the sale of ICE vehicles from 2035. Nearly 67% of locally-produced vehicles are exported, with the UK and EU accounting for about 60% of that.

The motor industry has been engaging with government on the issue since May 2021 and is hoping for a clear pronouncement on November 1, said Neale Hill, immediate past president of Naamsa, at the opening day of the SA Auto Week conference in Midrand on Wednesday.

“The longer we delay, the longer we move to the back of the queue,” said Hill, who is also President of the Ford Motor Company of Southern Africa, which produces the Ranger bakkie for the local and export markets.

He echoed the sentiments of Volkswagen MD Martina Biene, who said SA’s motor industry risks getting outflanked by countries such as Egypt and Ethiopia as local manufacturers continue to wait for the government's EV policy. Speaking to Business Times on the weekend, Biene said: “Volkswagen has to prioritise countries globally and, because of a missing policy, SA doesn’t get high up on the list of countries to be prioritised, and why would we be? Every day and every month we are missing out on opportunities for investment that others are getting faster.”

Apart from introducing manufacturing incentives, local carmakers want the government to reduce the 25% import duty on EVs to stimulate local demand for battery-powered vehicles. Due to their high prices, EVs still represent less than 1% of local car sales.

Billy Tom, Naamsa president and CEO of Isuzu Motors SA, told the Auto Week conference that NEV sales increased 421% from 896 units in 2021 to 4,764 units in 2022 but remain negligible as a percentage of total new vehicle sales. Naamsa says that together with government, it wants EVs to account for 20% of SA’s new-vehicle market by 2025, and 60% by 2035.

Developing local battery production was also important to support local content in SA exports to Europe, said Hill.

Government has missed previous opportunities to set an EV policy, most recently in February’s budget, but Naamsa CEO Mikel Mabasa was confident an announcement will be made on November 1 as the auto industry is a critical part of SA’s economic landscape, contributing about 6% to GDP.

Currently, only two of SA’s major vehicle manufacturers make NEVs. Toyota SA makes the Corolla Cross petrol-electric hybrid and Mercedes-Benz SA manufactures a C-Class plug-in hybrid.