The long-awaited electric vehicles (EV) policy white paper has stressed the urgency of implementing energy, freight rail and port reforms if South Africa hopes to create a thriving EV industry.
“Poor performance of South Africa’s freight logistics system and unstable electricity supply weakens exports. Implementation of economic and institutional reforms are key to reversing the current trend in performance,” the paper said.
The government has been under pressure to release policy guidelines since major export markets in Europe announced plans to phase out internal combustion engines by 2030. Volkswagen’s passenger car CEO, Thomas Schäfer, caused a stir two weeks ago when he said South Africa must get its act together or risk losing major foreign automotive investments.
“Eventually you have to say, why are we building cars in a less competitive factory somewhere far away from the real market where the consumption is? I'm very worried about it. We're not in the business of charity,” Schäfer said.
But Volkswagen Group South Africa (VWSA) MD Martina Biene later walked back those comments in an interview with TimesLIVE, saying the company was not about to shut down its 80-year-old factory in Kariega and trigger the loss of 50,000 jobs in its supply chain.
She said the Kariega plant was committed to building Polos for the local market and export until 2028, as well as the Polo Vivo for South Africa until 2027, plus a new compact SUV.
But Biene reiterated calls for the government to finalise the electric vehicle policy to future-proof the car manufacturing industry. She also expressed frustration over bottlenecks at the ports. “The ports are stuck, you can’t get the materials in, we have to cancel shifts because there is no electricity,” she said.
VWSA commended trade, industry & competition minister Ebrahim Patel for publishing the policy, calling it “the first major step towards preparing the South African automotive industry to transition to the EV era”.
The white paper, which was released on Monday, said improvements in the ports and rail network, along with power grid stability, would have a positive impact on output, exports and international competitiveness.
The ports are stuck, you can’t get the materials in, we have to cancel shifts because there is no electricity
— VWSA managing director Martina Biene
It suggested that an analysis of South Africa’s EV charging infrastructure should be conducted by Eskom, Sanral, the National Association of Automobile Manufacturers of South Africa (Naamsa), the department of trade, industry & competition, the department of transport, the Industrial Development Corporation and the Development Bank of Southern Africa.
To promote the local market, the white paper proposes a temporary reduction on import duties for batteries to be installed in locally produced vehicles until 2028.
It says the transition to electric vehicles would be low-carbon once charging infrastructure shifted to renewable energy sources. Renewable energy-based charging stations were vital to allay concerns about grid power supply.
Patel said now that the policy had been released for public comment, it was up to finance minister Enoch Godongwana to announce further incentives to support the EV sector.
“The full road map for electric vehicles will have three components. First is the white paper. This covers the framework for the transition to electric vehicles. It gives the broad time horizons and identifies the means by which we will create this. Secondly, we have guidelines that will spell out the implementation framework,” Patel said.
“The third component would be the minister of finance’s budget speech that will provide details on fiscal elements.”
Patel said the EV policy release was a critical milestone in modernising the auto manufacturing sector as the global market shifts away from internal combustion engines.
The CEO of Mercedes-Benz South Africa, Andreas Brand, welcomed the release of the white paper. “We are reviewing the white paper and will engage in further dialogue with government and key stakeholders,” he said.
BMW spokesperson Hailey Philander said the group has had to operate within the confines of current industrial policy in South Africa when determining new model production, often several years in advance. “It is a collective goal as the local electric vehicle industry continues to grow, and we are encouraged by the release of the white paper.”
Isuzu Motors South Africa's executive for corporate affairs, Lebogang Makolo, said the comprehensive road map outlined in the white paper aligns with the company's commitment to carbon neutrality.
Andries Malherbe, director of Zero Carbon Charge — a battery charging business — said that while the release of the white paper was a “good start”, more focus was needed on renewable energy to create a zero-carbon charge system.
“Despite recognising the need for renewable energy charging stations, a great deal of the white paper is devoted to how the existing grid [which is reliant mainly on coal] can be capacitated to cater for EVs. In his press conference, minister Patel indicated that the priority was for the existing grid to become greener,” he said.
National Association of Automotive Component and Allied Manufacturers CEO Renai Moothilal said he appreciated the work that went into developing the white paper and ensuring a robust policy framework for the components sector.
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