The transition to emissions-free mobility has been driven by three factors: in the US, the extraordinary story of Tesla; in the EU and the UK, regulatory reform aligned with the Paris Agreement; and in China, a strategic push by an authoritarian state.
The US has essentially shut its market to China’s electric vehicles (EVs) with a 100% tariff, but for the Europeans the issue is complicated. Last week, Volkswagen said it was considering closing factories in Germany, and BMW Group issued a profit warning. Along with Mercedes-Benz, these vehicle makers are reliant on sales in China just as the trade spat threatens to escalate.
This is partly because retail demand at home is severely misaligned with the demands of regulators. Companies are not permitted to sell the cars their customers want, and subsidies have fallen away so sales (and margins) are in the doldrums. In the UK, dealers are even rationing internal combustion engine cars to avoid fines.
The future of the European motor industry is uncertain and vulnerable. In SA, our motor industry is a significant source of employment and exports. News last week that some tariffs have not been reviewed for as long as 20 years, and the glacial approach to designing industrial policy, puts all of this at risk.
If our regulatory frameworks are not able to move as quickly as the industry is, we will be left behind. SA builds 0.7% of the world’s cars — a rounding error that is nonetheless enormously important in cities such as Gqeberha, East London, Durban and Tshwane. Hopefully the trade, industry & competition minister, Parks Tau, has his eye on the pace and severity of disruption.
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