The government’s insistence on excluding hybrid-electric vehicles from proposed manufacturing incentives will limit BMW SA’s ability to increase the number and value of local hybrid components in its new X3 car range, says MD Peter van Binsbergen.
BMW’s Rosslyn, Tshwane, vehicle assembly plant is to start commercial production on Tuesday of the new-generation X3 and become the only BMW plant in the world to build plug-in hybrid-electric (PHEV) versions. But a protest by hundreds of shop floor workers suspended for alleged involvement in a multimillion-rand medical aid fraud threatens plans to ramp up production to full capacity by the beginning of 2025.
Van Binsbergen said: “This incident could not have come at a worse time.”
In addition to PHEVs, Rosslyn will build petrol and diesel X3s using the traditional internal combustion engine (ICE). PHEVs have dual motors, one of them ICE and the other electric.
Unlike mild hybrids, where the ICE continuously regenerates its electric twin, PHEV electric-motor batteries require external charging.
The government has said that from 2026 proposed electric-vehicle (EV) incentives will not apply to cars or light commercial vehicles using any form of ICE technology.
Van Binsbergen is among industry leaders hoping to persuade new trade, industry & competition minister Parks Tau to not only extend the incentive to hybrids but also to introduce consumer incentives to stimulate local EV demand. The government has said it cannot afford the latter, but motor companies have offered to match any incentive, rand for rand.
If there was an incentive for hybrid manufacture, we could look at more localisation.
— BMW MD Peter van Binsbergen
BMW SA, which exports about 95% of production to more than 40 countries, has one of the lowest local content levels in the SA motor industry — 30%, against an industry average of about 40%. Existing government automotive policy aims to lift this average to 60% by 2035.
While BMW’s local content will be maintained on ICE versions of the new X3, the figure will drop on PHEVs because of the need to import expensive battery packs. “We looked to see if there was a business case to assemble batteries locally, but there wasn’t,” Van Binsbergen said. “If there was an incentive for hybrid manufacture, we could look at more localisation.”
The new X3 is BMW SA’s first venture into EVs. Other companies already build mild or plug-in hybrids, in limited numbers.
Finance minister Enoch Godongwana has intimated that one local manufacturer wants to build all-electric vehicles, known as battery-electric vehicles (BEVs) from 2026. The government wants others to follow as soon as possible to protect the industry’s export activities.
More than two-thirds of vehicles built in SA are exported, most to countries that plan to outlaw sales of new ICE and hybrid vehicles in the next few years.
But with growing consumer resistance to BEV purchases in many major markets, particularly in Europe, some governments are considering extending by several years deadlines for hybrids, now in strong demand.
“If Europe does that, it will take some of the pressure off us,” said Van Binsbergen. In most manufacturing countries around the world, motor companies were able to move from ICE to hybrid and only then to BEV. Cutting out the hybrid “halfway house” would be a huge challenge for local companies, he said. “There’s a lack of enthusiasm around the BEV-only incentive package.”
Whatever happens, the local motor industry will not switch completely to EV production. There are plenty of export markets, notably in Africa, where ICE vehicles will be in demand for many years. In SA, most consumers are not convinced of the benefits of the new technology.
After decades of building the 3-Series sedan range, Rosslyn switched to the X3 in 2018. Production of the first model halted at the end of last month. The plant will build only PHEV X3s for the rest of this year. Petrol and diesel models will follow from the beginning of 2025, as plant production ramps up to its maximum annual capacity of about 75,000 vehicles.
Until then, BMW’s Spartanburg plant, in the US state of South Carolina, will meet the demand of SA customers for petrol and diesel X3s.
Van Binsbergen hopes the ramp-up will give BMW SA time to defuse the medical-aid fraud crisis. “Multiple hundreds” of mainly shop floor, production-line workers have protested outside Rosslyn after being suspended from work because of their alleged involvement in fraud at the BMW Employees Medical Aid Scheme.
Officials at the National Union of Metalworkers, to which they belong, say they are unwitting victims of the fraud. About 20 workers have been dismissed so far, but Van Binsbergen said the others were suspended while police and the company investigated. “Suspension does not mean termination,” he said.
“The investigation and disciplinary process are not complete. However, it is crucial that we investigate according to policy. You have to be consistent with discipline and procedurally fair.”
He said nonsuspended employees continued to work as normal. There were more than enough to meet immediate production targets but there could be shortages if the issue were not finalised by the time the plant reached full production. Then, it will need at least 600 workers (or “associates”, as the company likes to call them) for each of the three daily shifts — a total of 1,800.
Rosslyn’s total workforce is about 2,000. BMW SA is a vital cog in the German parent’s global X3 production chain. With expectant customers in more than 40 countries, it has to meet its delivery commitments. If some suspended workers are not reinstated after investigations are complete, the company will have to find and train replacements.
“There is no room for error,” said Van Binsbergen. While there was no danger of the incident undermining the German parent company’s commitment to its 51-year-old SA subsidiary, which is no stranger to labour disputes in the past, X3 production had to meet targets.
“We have to deliver,” said Van Binsbergen. “It is in our hands.”
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