As the world increasingly embraces electric vehicle (EV) technology, driven by the shift to renewable energy, South Africa’s automotive industry must move quickly to capture the opportunities this change presents.
“South Africa needs to play to win,” Mark Raine, co-chief executive and executive director of Mercedes-Benz South Africa, said at a forum at the Gordon Institute of Business Science with Dean Morris Mthombeni.
“We are at a critical juncture in the EV revolution, and while South Africa is at the tail end of the development, the timing is right,” Raine said.
For decades South Africa has held the enviable status of being Africa’s biggest vehicle market by sales and exports. The country risks lagging behind the rest of the world in terms of electric vehicle market adoption and manufacturing, potentially missing the transformation sweeping the global automotive industry and all the opportunities that come with it.
While estimates put the motor industry’s contribution to GDP at 5%, Mike Mabasa, chief executive of the National Association of Automobile Manufacturers of South Africa, said this figure is “hugely understated” as it doesn’t take into account the entire value chain, including after sales, financing and insurance.
Electric vehicles are gaining in popularity globally as they are cleaner, produce fewer greenhouse gas emissions, are attractive to environmentally conscious consumers, and offer lower fuel costs. Barriers to widespread adoption include a lack of infrastructure and high import duties.
Considering that the cost of fuel has increased by 24.5% over the course of 2022, Raine said the expense of owning an electric vehicle “will dilute over time with the scalability of the technology”. However, he said the “entire system only works if you look at renewable energy,” which in South Africa would mean solar and wind. “The country needs early adopters to get the transformation right,” he added.
While South Africa’s automotive sector has largely moved from manufacturing to assembly activities in past few years, Raine called Mercedes Benz’s facilities in the country “state of the art.” In June 2021, the company invested an additional R3-billlion in its East London plant, after it made a R10-billion investment into the same facility in 2018.
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