BMW South Africa says making electric vehicles in South Africa will strengthen the country’s competitiveness as a manufacturing facility that produces cars for the German company.
This week, Peter van Binsbergen, CEO of the BMW Group in this country, said: “To secure long-term production in South Africa, we need to get production in EVs at some stage. We are encouraged that [trade, industry and competition] minister Ebrahim Patel is focusing on that and are in discussions about the strategy and policy. We see this as a necessity.”
BMW, which set up a facility in Roslyn, north of Pretoria, in 1973, is in discussions with the government around policy regarding electrical vehicles (EVs) that are gaining popularity in the developed world.
European policymakers have banned the sale of petrol and diesel cars from 2035, but will allow the sale of combustion-engine vehicles that run on e-fuels thereafter.
The department of trade, industry & competition (DTIC) released the Auto Green Paper in May 2021 to establish a policy foundation for EVs. Since then, it has received comments from sectors including the car industry, academics and research firms.
“Further work to complement stakeholder consultations was commissioned to analyse what other countries are doing to support EVs and exploring opportunities in related component production. Currently, measures to support the transition to e-mobility continue to be explored, evaluated and costed,” it said in response to Business Times questions.
The department did not say when the policy will be finalised.
BMW continues to update its Roslyn facility to cater for the possibility of manufacturing EVs.
“We keep investing to enable us to have the flexibility to do this. What we need is the decision on policy and this will help us in our motivation with Munich (BMW headquarters) [regarding] the business case for EV manufacturing in South Africa,” said Van Binsbergen.
BMW introduced its first hybrid electric vehicle here in 2015 and since then it has launched several models, with another expected this year. Van Binsbergen said sales of EVs doubled last year.
But there are concerns that load-shedding could derail the take-up of EVs in South Africa.
Van Binsbergen said many EV-loving customers “have pretty much moved off grid”. “Once you move to mass volume, then load-shedding becomes a problem. If we want to move to EVs on a large scale, we need to stabilise our grid and move away from coal because it doesn't help generating electricity with coal and putting it into EVs — the Just Energy transition is so important [and, therefore, the shift to solar and wind energy]. We need green energy to drive green products.”
What has kept us in South Africa is the stable industrial policy ... it has allowed us to make long-term decisions. It has kept the auto industry alive. If it wasn’t for the policy, we wouldn’t have been in the country, said Van Binsbergen
— Peter van Binsbergen, CEO BMW South Africa
Gina Handley, head of product marketing and volume planning at Volkswagen Group South Africa, told the 2023 Platinum Group Metals Industry Day in Johannesburg this week of the growing demand for EVs despite the country's electricity constraints.
“The journey to electric vehicles in South Africa is going to happen. It might not happen at the rate we have seen in international markets. We are also seeing a lot of international markets introducing stringent strategies which in the South African context are miles ahead,” said Handley.
In March, Volkswagen announced it would invest nearly $193bn (about R3.4 trillion) over the next five years to bolster its global EV strategy.
Handley said higher LSM groups, the target market for such vehicles, were finding a way around the electricity crisis.
“A lot of people in high LSM groups are moving to solar as an alternative source of energy. So charging the electric vehicle at home is going to become a lot more affordable than relying on the grid,” she said.
“I definitely think there is an opportunity for electric vehicles for South Africa and a way to get around it in the event of load-shedding”.
Asked about the availability of charging stations for motorists travelling between Johannesburg and Cape Town during the festive season, she said private companies had shown interest in establishing charging stations.
“We are seeing customers wanting to do the journey down to Cape Town. There are a lot of companies investing in charging stations in the private sector, not many from the government. The conversations are very real around charging stations,” said Handley.
Andreas Roos, head of BMW M Motorsport, said EVs can also be used to store electricity that can be used to power households, with Germany already running a project such as this.
“This is something that is going to happen in the future. EVs can be a good asset for electricity,” he said.
Van Binsbergen said the IT hub of BMW South Africa is working on software for the group to enable EV cars to provide power back to the grid.
This year the company celebrates 50 years in South Africa. The Roslyn plant was the first outside Germany and has produced more than 1,6-million cars, with some, among them the iconic 325iS that's popularly known as “gusheshe”, made specifically for the South African market.
BMW produces X3 models in South Africa, with 96% of them exported to international markets, the bulk of which go to Germany and the UK.
More than R12,6bn has been invested in the production facility by the BMW Group since 1995.
“What has kept us in South Africa is the stable industrial policy ... it has allowed us to make long-term decisions. It has kept the auto industry alive. If it wasn’t for the policy, we wouldn’t have been in the country,” said Van Binsbergen.
Adapting the industrial policy for EVs is important to “secure our future in the country for the next generations”.
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