SA motor industry bosses on Wednesday called for government to incentivise the local production of hybrid cars in the wake of declining demand for electric vehicles (EVs) in Europe, the main export destination of SA’s seven motor manufacturers.
Speaking in Cape Town at the Auto Week conference, hosted by Naamsa, BMW Group CEO Peter van Binsbergen said SA needed to take smaller steps towards a full EV future with a much broader new energy vehicle (NEV) policy that includes policies for hybrid cars.
At present the NEV white paper caters only for battery-powered and hydrogen EVs in which car manufacturers can claim 150% of investment spending on such vehicles in the first year.
The incentive, to take effect from 2026, was announced in February by finance minister Enoch Godongwana to encourage the local production of EVs.
The incentive aims to help ensure the survival of SA’s seven car manufacturers who export two-thirds of their production into a global market that is moving into an electric future.
To reduce air pollution, the EU seeks to ban the sale of internal combustion engine (ICE) cars by 2035, except for those that run on synthetic e-fuels that are carbon dioxide neutral.
Van Binsbergen and others want the government to add hybrid-electric vehicles to the policy mix after a softened demand for EVs in Europe this year. The slump is attributed to diverging policies on green incentives across the EU, while regulators have imposed heavy tariffs to try to keep out cheap Chinese EVs, potentially adding to purchase prices.
In contrast, hybrid car sales have gained traction in the EU this year as buyers see them as an affordable compromise between all-combustion and all-electric.
BMW, Mercedes-Benz and Toyota are the only local carmakers producing hybrids at their SA factories, with Ford to follow with its Ranger plug-in hybrid in 2025.
SA’s car manufacturing industry was in a pretty safe spot with a stable industrial policy, but it needed to be updated to include hybrids, Van Binsbergen said.
“We need to produce hybrids and battery-electric vehicles (BEVs) in SA to stay relevant in global vehicle production and protect local jobs. We need a clear plan to drive localisation and SA needs to be an attractive location for vehicle production,” he said.
His sentiments were echoed by Ford Africa president Neale Hill, who said a progressive automotive policy was vital to drive investment in the industry.
“The challenges we face require collaboration from the government. It’s an evolving landscape and needs additional support to transition to NEVs,” he said.
Motor manufacturers will be lobbying new trade industry & competition minister Parks Tau on these issues.
NEVs accounted for 1.45% of all new cars sold in SA in 2023 but it was a 65% increase to 7,693 units compared with the year before.
The biggest volume contributors came from hybrid variants (84%). EVs contributed 12% of NEV sales last year and plug-in hybrids 4%.
The Toyota Corolla Cross Hybrid is the most popular car in the local NEV segment while rivals include the Haval Jolion and H6 hybrids, and Honda Fit hybrid.
The NEV white paper incentivises EV production but consumers are not financially encouraged to switch to cleaner cars, unlike in many markets about the world where governments offer tax breaks and subsidies on EVs.
EVs are imported to SA with taxes of 25% compared with the 18% imposed on imported ICE vehicles. Former trade & industry minister Ebrahim Patel said EV import duties would not be reduced in the short term as an increase in sales of battery-powered cars was undesirable due to load-shedding and the small public charging infrastructure.
He said the government would look at reducing EV import duties over the next seven to eight years.
In spite of the policy, EVs have become more affordable after initially being available only as premium cars with seven-figure price tags a few years ago.
Recently more affordable models have been launched, the cheapest being the Dayun Yuehu S5 for R399,900.
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