Motor industry and trade union officials have begun policy discussions with trade, industry & competition minister Parks Tau, a conversation that many in the industry hope will lead to an overhaul of proposed plans to incentivise the local manufacture of electric vehicles (EVs).
Tau’s office issued a statement on Wednesday saying the minister, who replaced Ebrahim Patel in July, had “successfully” chaired his first meeting of the motor industry executive oversight committee, which contains representatives of vehicle manufacturers, components suppliers and the National Union of Metalworkers of SA (Numsa).
In the view of many industry officials, real success will be measured by Tau’s willingness to rewrite key parts of Patel’s EV policy white paper, which was released in December 2023.
Specifically, they want manufacturing incentives broadened to include hybrid-electric vehicles, and for the government to stimulate local EV sales by offering cash or tax incentives to customers.
As things stand, manufacturing incentives, which are due for introduction in the 2026-27 tax year, will be limited to fully electric vehicles, also known as battery electric vehicles (BEVs), whose battery packs rely totally on plug-in charging.
Hybrid EVs, which use both battery packs and petrol or diesel internal-combustion engines (ICEs), are excluded.
Most vehicles built in SA rely exclusively on ICEs but some local companies also manufacture hybrid-electric cars and bakkies.
Staged transition
Some are mild hybrids, in which the ICE motor constantly replenishes EV battery power without the need for external charging, while the battery packs on others require independent charging. These are known as plug-in hybrids (PHEVs).
Critics of the policy say that, as has happened in most other countries, it makes sense for the SA motor industry to transition from ICEs to BEVs in stages.
Though finance minister Enoch Godongwana said in February that one company had expressed readiness to build BEVs from 2026, other local manufacturers say they are not ready to do so.
Recently, however, Tau said Chinese company BYD, the world’s largest EV manufacturer, had expressed interest in investing in SA.
While no details were given, government officials were quoted as saying that BYD had “expressed interest in working with SA, leveraging the country’s automotive expertise and access to key resources like lithium and manganese for battery production”.
Local market research shows potentially strong consumer interest in hybrid EVs but relatively little in BEVs. Even with manufacturing incentives, nearly all SA-made BEVs will be priced well beyond all but the richest pockets.
Hybrids would be much more accessible. This is also the reason many in the industry want the government to offer cash or tax incentives to buyers.
Follow suit
Because of their new technology and smaller production numbers, they are much more expensive to build and buy. In most countries in which EV sales have flourished, initial interest was sparked by offering incentives to bridge the price gap.
The government says it can’t afford to follow suit. Motor companies respond that if it is serious about growing the local EV market and meeting its environmental goals, it can’t afford not to.
In addition to EVs, the motor industry also wants Tau to ensure the government meets its commitments to the existing 2021-35 SA automotive master plan.
While vehicle and components companies’ activities are primarily governed by the incentive-driven Automotive Production and Development Programme (APDP), the overarching master plan requires the government to provide the infrastructural support to make the APDP succeed.
Its record is not impressive. Until recently, load-shedding was a significant constraint on production, promised support for automotive demand in Africa has been mostly absent, the government seems unable to halt the booming illegal import of used vehicles, and the ports and railways don’t work.
Tau has a lot to fix if he is to realise his office’s promise that yesterday’s industry meeting was the start of “an exciting new phase for advancing SA’s automotive industry towards the ambitious vision outlined in the master plan”.
Renai Moothilal, director of the National Association of Automotive Component and Allied Manufacturers (Naacam), described the meeting as “constructive”, allowing all sides to explain their challenges directly to Tau.
He added: “There was a recommendation to form a technical team to troubleshoot the key challenges that need to be addressed.”
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