Decisions needed on future path of SA motor industry

The SA motor industry must beware of committing itself too deeply to a single automotive technology. Such is the rate of engineering and scientific innovation that the wrong bet could do lasting damage to the industry’s future. 

That was one of the key messages from a motor industry conference in Pretoria . However, speakers said this was no reason for SA to vacillate on a policy for new-energy vehicles (NEV). Government must provide a clear but flexible policy that would allow vehicle and components manufacturers to be ready for challenges. 

General secretary of the National Union of Metalworkers of SA (Numsa), Irvin Jim, said: “We live in a world that is not static. It will leave us behind if we continue to talk and talk. Multinationals don’t care about SA. If we aren’t relevant, they will move their production to the other side of the world.” 

He was speaking at a conference organised by the National Association of Automotive Component and Allied Manufacturers (Naacam). 

Governments and motor companies around the world are trying to determine the best form of clean automotive energy for the future. Electric vehicles (EVs) are currently in the driving seat, but there are also strong lobbies for hydrogen and fuel-cell power. The EV stable itself contains several options, including full-electric motors and hybrid engines, which use a combination of electric and traditional petrol and diesel internal combustion engines (ICE). 

The only certainty, until recently, was that ICE vehicles would be phased out in the next few years. Many major markets have set deadlines for their demise but now the development of carbon-neutral, synthetic ICE fuels has caused some to reconsider. 

Trade, industry and competition minister Ebrahim Patel told the conference last week that SA was talking to potential foreign partners to help establish an EV manufacturing industry. It had also launched a study to gauge the prospects for SA to be involved in EV battery production. Many of the minerals required are found in Africa, notably in Zambia and the Democratic Republic of Congo. SA, with resources of its own, has talked to both countries about co-operation. 

The trouble with that, said American EV consultant Loren McDonald, was that batteries requiring these minerals, such as lithium, cobalt and copper, might soon become redundant. A new sodium ion battery, whose main ingredient is salt, was being developed and could be ready within five years. While there was no guarantee yet that it would prove superior to current battery technologies, it was 30% cheaper to manufacture. 

Its success would be bad news for China, he said, which has spent the last few years buying up and dominating the EV battery supply chain. Chinese companies own many of Africa’s minerals mines, from where they send ore for processing in China. 

“The raw materials for sodium ion batteries can be found anywhere in the world. Sodium ion could change everything. Every country can create its own supply chain,” McDonald said. 

SA must be particularly careful about which technology route it follows. Almost all vehicles manufactured here are ICE and most are exported to countries which have declared their intention to go all-electric in the next few years. So unless the local motor industry builds more EVs, many of those exports could be lost. 

But not all. As Ford Africa president Neale Hill observed , many developing nations, including most in Africa, are in no rush to move to EVs. “ICE will be here a lot longer than a lot of people think,” he said. “Let’s not be too quick to throw out the old.” 

Nevertheless, there is pressure on government to publish its NEV policy white paper to give the local motor industry a clear sense of the incentive rules within which they will move between ICE and EVs. The white paper was due in 2021 but last week Patel suggested the new deadline was in time for next year’s general election. 

Industry sources say government favours an EV programme for full-electric vehicles, generally known as battery-electric vehicles (BEV). However, Toyota SA president Andrew Kirby said hybrids should be included. “We need to understand that there are multiple alternatives,” he said. “We don’t know how NEV technology will evolve. We need to be conscious of different segments that demand different solutions. Different ones will come round. We have to be in a position to adapt quickly to whatever is coming.” 

Whatever the future holds for the SA motor industry, Patel said it must include more local production of components and accelerated development of black-owned components suppliers. One of the targets of the 2021-2035 SA Automotive Master Plan is to increase the value share of local content in SA-made cars and bakkies from 40% to 60%. This would create major opportunities for black involvement. 

This in turn would create more employment. “The components sector is where we can create good jobs,” Jim said. 

At the conference, Naacam director Renai Moothilal said local components companies participating in the accompanying trade show had committed themselves to R4.9bn of new investments before the end of 2024. Patel described this as a vote of confidence in SA an automotive investment destination.