The government has been advised to accelerate its thinking and decision-making about how South Africa’s automotive industry proceeds along the route towards electric vehicles and electromobility.
Sascha Sauer, the new head of Audi South Africa, says that if the majority of markets, especially in Europe, are going exclude and steer away from traditional internal combustion engine (ICE) vehicles in favour of electric vehicles (EVs), the question undeniably arises – what is South Africa going to export in 10 years’ time?
Audi SA head of retail, planning and supply chain Asif Hoosen adds that the debate about EVs in South Africa is gaining momentum and there is a realisation that in 10 to 15 years there will be little to no demand for the product currently manufactured in South Africa in the markets SA-based vehicle manufacturers supply.
“The industry has got to act now in the interest of establishing itself as a key player in the EV market and, from a strategic point of view, we need to set ourselves up for that future success,” he says.
Sauer stresses that the motor world is going to change towards EVs.
“That is not something which we kind of can cherry-pick in this country from an Audi brand perspective here [in South Africa] because, whether we like it or not, the future is electric for most, if not all, manufacturers.
“Many of them have already publicly and openly committed themselves to a certain timeline – maybe 2030, maybe 2025, maybe 2035 – to become all-electric, and that also involves markets like South Africa.”
Sauer says 10 years might sound like a lot of time, but it’s basically a little bit more than a product lifecycle in the automotive industry.
“If we don’t prepare ourselves for the future, we are going to be left behind as an industry.
“Knowing and understanding that South Africa is producing cars and is even exporting a substantial amount of cars it produces, it is important to also discuss electric cars from a government perspective in terms of the contribution of the automotive business to GDP, securing jobs in the industry and the country, and creating value added in the country by producing cars and components,” he says.
Meetings with government
Sauer refers to feedback he received about a “positive and constructive” meeting held last week between Minister of Trade, Industry and Competition Ibrahim Patel and the chief executives of the original equipment manufacturers (OEMs) that was facilitated by automotive council Naamsa.
He says Patel “understood well that before you can start producing EVs in South Africa, you must develop the local market because no manufacturer will ever invest in plants, factories and infrastructure if there is not a critical mass achieved in the local market”.
Norman Lamprecht, a director of the Automotive Industry Export Council (AIEC) and an executive manager at Naamsa, said last week that the industry has had several meetings with Patel in the recent past on the electromobility roadmap for SA’s automotive industry.
“We are actually far advanced on the electromobility roadmap. The meetings with the minister [were] specifically to focus on the hard issues and to accelerate that because we need to keep up [with the latest developments/trends].
“We definitely can’t wait until the last moment and until 2030 for anything to happen.”
Government ‘penalising’ EVs
Mikel Mabasa, who is AIEC chair and Naamsa CEO, says Patel is expected to make a policy announcement on electromobility later this month.
However, Sauer says the government is not currently supporting the adoption and sale of EVs in South Africa because of the way it taxes EVs compared to traditional ICE vehicles.
He says government is penalising EVs by imposing a 25% duty rate on EV imports when the majority of car imports enjoy a preferential 18% duty rate.
He stresses that governments in all the major markets, including Europe, the US and China, all support EV cars financially.
“Unfortunately this is still required to cover the higher production cost of EV cars because customers will probably not buy these cars if they are way more expensive than a traditional ICE car,” he says.
Hoosen says electromobility is the biggest opportunity Audi SA sees in terms of the future of its business in South Africa and for the industry.
He says the company is gearing itself for the introduction of the all-electric Audi e-tron in 2022.
Hoosen adds that the EV market in South Africa will be quite small, at least over the next five years, if nothing changes dramatically.
“Our expectation is not that when we come in next year we are going to be selling 1 000 e-tron cars a year. It’s very far away from that, but we recognise we have to take the first step because it’s strategically important for the future of our brand.”
He says the premium car manufacturers will all be bringing EV cars that will cost about R1 million into SA – and that it’s clear there is an interest in EVs among their customers.
Hoosen stresss that a lot will have “to come together” to allow the EV market to prosper in SA, including the government becoming involved in the infrastructure challenges presented by Eskom.
He says Audi SA achieved a market share of 19.8% of the premium car market in the first quarter of this year, a 1.6 percentage point increase on the 18.2% market share it achieved in the corresponding period in 2020.
He adds that Audi has launched a total of 13 new performance models into the SA market, with further new models to be launched in the next few months, which means it will have the youngest and freshest product portfolio in the market.
Audi SA delivered and sold 5 800 Audis into the SA market in 2020, according to Hoosen, and anticipates significant volume growth and to sell “at least in excess of 7 000 vehicles this year”.