South Africa’s push to involve manufacturers in the global shift to electric vehicles (EVs) is a complex situation that could jeopardize over 100,000 jobs if policymakers don’t navigate carefully.
The automotive industry, including major players like Volkswagen (VW), has expressed frustration with the slow introduction of legislation in South Africa to support the shift to EVs. VW CEO Thomas Schaefer highlighted issues such as load-shedding, rising labor costs, and problems with Transnet, making South Africa less attractive for car manufacturing amid the global move towards EVs.
EVs and their components face a 7% higher tax than traditional vehicles, increasing production costs and retail prices for EVs, affecting sales and hindering investment potential. If South Africa does not transition to EV production, it risks losing significant export markets as the European Union and the United Kingdom plan to ban new internal combustion vehicles by around 2035.
The automotive industry contributed 4.9% to South Africa’s GDP and 12.4% to exports in the previous year, directly employing approximately 110,000 people. The risk is that these jobs could be at stake if South Africa lags in transitioning to EVs.
In response to these challenges, Trade, Industry, and Competition Minister Ebrahim Patel published a White Paper outlining an electric vehicle roadmap for South Africa and policy interventions for the automotive industry. The primary goal is to transition the industry from producing Internal Combustion Engine (ICE) vehicles to a dual platform, including EVs, by 2035.
Patel acknowledged potential challenges, such as job losses in sectors like petrol stations, and emphasized the need for a comprehensive and coordinated approach to minimize risks associated with the transition. The goal is to leverage decarbonization for growth, sustainability, and economic vitality while ensuring alignment with economic priorities.
The success of the transition relies on collaborative efforts from all stakeholders to turn this challenging shift into an opportunity for growth.
