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GP targets becoming Africa’s automotive Silicon Valley

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 04 Jul 2023

The Gauteng Department of Economic Development (GDED) is looking to turn the province into Africa’s automotive powerhouse, by creating a favourable regulatory environment for the rollout of new energy vehicles (NEVs) in SA.

This was the word from Blake Mosley-Lefatola, HOD of the GDED, speaking at a recent auto roundtable on new energy vehicles. It was hosted in Pretoria by the Tshwane Economic Development Agency, in collaboration with the GDED, Gauteng Growth and Development Agency (GGDA) and Automotive Industry Development Centre, a subsidiary of the GGDA.

Mosley-Lefatola discussed the importance of developing a clear policy framework that will help better prepare SA for the electrification of transport.

He highlighted the opportunities and new set of challenges associated with the transition from internal combustion engine (ICE) vehicles to NEVs faced by the Gauteng province.

Referencing a report by the National Association of Automotive Component and Allied Manufacturers, Mosley-Lefatola noted SA’s automotive sector contributed 4.9% to the country’s GDP in 2022.

The automotive component sector in the same period employed 78 804 people, while the component manufacturing sector contributed about 17.3% to SA’s manufacturing sector.

While these statistics position the province as the automotive powerhouse of SA and the continent, there are several hurdles to overcome, he pointed out.

“Our position as a province is that we would like to adopt a strategic approach to positioning ourselves as the NEV hub of the country and of the continent.

“But in order to do this, it’s going to be important that as a province we work with the other spheres to ensure policy certainty.

“We know that our peers from the private sector have been impatient with government’s response with regards to introducing favourable policies, so it will be important to work with GAC (a Chinese state-owned automobile manufacturer) and the other relevant government bodies, to ensure policy certainty in this area is met to the satisfaction of all stakeholders.”

SA’s NEV sales increased by 18.8%, from 1 401 units in the first quarter of 2022, to 1 665 units in the first quarter of 2023, according to a National Association of Automobile Manufacturers of South Africa (Naamsa) report. While the country is ahead of its African counterparts, SA lags significantly behind on the global front.

The International Energy Agency’s (IEA’s) Global Electric Vehicle Outlook 2023 shows more than 10 million electric cars were sold worldwide in 2022, and sales are expected to grow by another 35% this year, to reach 14 million.

According to Mosley-Lefatola, the most pressing challenge facing the local industry is the growing threat of global NEV policies being introduced. This, after the European Parliament in February approved a law to effectively ban the sale of new petrol and diesel cars in the European Union from 2035.

This was followed by the UK government, which in March committed to end the sale of petrol and diesel vehicles by 2030.

According to Naamsa, last year SA exported 360 000 vehicle units – 33.7% manufactured in Gauteng and 53.5% in the Eastern Cape, while 12.8% were from KwaZulu-Natal.

Mosley-Lefatola warned Gauteng’s idle NEV transition could result in a collapse of the province’s automotive sector, if nothing changes.

“The automotive sector in the whole province would have to navigate the transition from ICE to NEV vehicles and capitalise on the new economic opportunities presented by this transition, while reducing carbon emissions and promoting sustainable transportation solutions.

“If the province does not respond to this transition, it faces a risk of losing manufacturing capabilities and jobs, and this will ultimately contribute to the collapse of the sector, if not addressed accordingly,” cautioned Mosley-Lefatola.

[PICTURE] Mikel Mabasa

[CAPTION] Mikel Mabasa, CEO of Naamsa.

To date, more than 20 countries have announced the full phase-out of combustion vehicle sales over the next 10 to 30 years, including Germany, France, Netherlands, Sweden and Italy. These countries have national policies and targets to encourage the EV shift, according to an IEA report.

Local vehicle industry players have for years brought to light the numerous challenges hindering SA from progressing in the EV market.

These include the lack of supportive regulatory frameworks and additional incentives to safeguard EV sales from the high costs resulting from the economic downturn, and insufficient public charging stations across the country.

Also speaking at the event, Mikel Mabasa, CEO of Naamsa, discussed the challenges that need to be overcome, in order to support the sector’s transition, and ensure Gauteng becomes the “new Silicon Valley of the automotive industry”.

He warned that SA’s auto sector is under pressure to “adapt or die”, as global markets commit to EVs, while the country continues to move at a snail's pace towards e-mobility.

Among the reasons behind the slow pace, he explained, is the policy uncertainty, which is mainly caused by complex policy structures. SA’s automotive industry reports to nine departments, Mabasa noted.

“These departments have a myriad of responsibilities over and above taking care of the automotive industry. We need to look at institutions within government and a dedicated department to support the automotive industry.”

Other African countries are starting to overtake SA, he noted. “Morocco, Egypt, Ghana and Nigeria are beginning to take a very aggressive approach in participating in the automotive industry. These guys are eating our lunch and their proximity to Europe is less than ours.

“It takes Morocco four hours to move a ship from the country to Spain, while it takes us in SA eight days − on a lucky day − to move a ship from Europe into Durban.”

As a result of the logistical challenges, there are times when ships are not able to dock at the Durban port, further hampering delivery turnaround times, he concluded.

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