YAEL SHAFRIR: Africa lays the groundwork for a future of electric vehicles
There is a real opportunity for SA to help lead the e-mobility revolution on the content
Many South Africans who struggle every day to reach their places of work using minibus taxis or cars on congested motorways may find it hard to believe that an e-mobility revolution is about to happen. But a number of trends are moving in that direction.
E-mobility refers to electric vehicles (EVs), ideally powered by renewable energy sources, which may range from two- and three-wheeled vehicles to cars and buses.
Some recent developments in SA are laying the foundation of the future e-mobility revolution. This will help the country to meet its carbon reduction commitments under the Paris Agreement. Promising moves include the recent publication of the SA Renewable Energy Masterplan, which embraces battery storage and renewable energy. Work is under way on an EV master plan and a critical minerals master plan, which will draw on input from the department of trade, industry & competition and the department of mineral resources & energy, among others.
In the private sector, BMW announced in June that it will be manufacturing the BMW X3 as a plug-in hybrid for global export at its plant in Tshwane. In recent years, there has been a significant increase in the importation of electric and solar batteries into SA, as well as the growth of battery assembly in the country, especially in the Western Cape.
These local events are happening in parallel with African-wide initiatives. The African Continental Free Trade Area (AfCFTA) has prioritised the automotive sector and transport/logistics value chains.
The African Association of Automotive Manufacturers is working with original equipment manufacturers (OEMs) on a continent-wide strategy. The African Export-Import Bank is supporting investments in the automotive sector with various programmes. Critical minerals and renewable energy are also likely to become priority sectors across the continent.
Certain African jurisdictions are incentivising EV and e-mobility development. Rwanda has plans to phase in electric buses, cars and motorcycles, while the recent steps taken by Kenya are particularly noteworthy. It has established an e-mobility task force, whose main objective will be to develop a national electric mobility policy covering all modes of transport (road, air, rail and maritime) and drive uptake of e-mobility; create an enabling environment; recommend fiscal and non-fiscal incentives to promote import, local manufacture and assembly; provide a framework for the end of life and disposal; and provide a framework for the development of carbon credits, creation of standards and measurement of effects on the economy and the environment.
Initially, EVs are more likely to find traction in public transport and two- to three-wheelers before wide-scale adoption by the automotive sector. The evolution will be different in each African jurisdiction. For example, Kenya, Nigeria and Uganda have more two- and three-wheelers than SA, so they are likely to prioritise electrification of those modes of transport. In SA, there may be greater potential in starting e-mobility in the public transport/delivery sectors, to meet a significant gap in the market.
There is a real opportunity for SA to help lead the e-mobility revolution in Africa, for several reasons. The continent urgently needs affordable and sustainable mobility solutions. The market for lithium battery cells could be met through local manufacturing since the continent possesses many of the necessary raw materials.
SA has a mature automotive sector, including OEMs that export around the world, and it has signed trade agreements that facilitate exports to Europe, such as the European Partnership Agreement (with the Southern African Development Community) and the African Growth and Opportunity Act. In creating an EV export industry, SA can take advantage of the AfCFTA’s rules of origin, where 40% of local content from Africa is under discussion.
By developing a multifaceted e-mobility manufacturing sector, SA would help to speed up its own transition to a greener future and meet its climate change goals, promote industrialisation in line with Africa’s Agenda 2063 (the continent’s blueprint for achieving inclusive and sustainable development over a 50-year period, with an emphasis on youth and women), and create jobs.
As SA transitions away from internal combustion engine vehicles, it will be able to participate in other parts of the value chain beyond car manufacturing. There is an opportunity to manufacture the cells or batteries needed for EVs, and battery factories can stimulate local and regional economic growth. Battery factories could help to develop skills in engineering and attract talent to different regions where manufacturing takes place.
Of course, there are constraints on these plans. The most obvious in SA is the lack of access to uninterrupted energy sources. Another is that it is difficult to raise seed capital for projects related to environmental, social and governance improvement. More funding is needed in SA to support innovative start-ups.
• Shafrir is associate director at Webber Wentzel.
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