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South Africa’s car manufacturing industry is at risk of being overtaken by countries like Ethiopia and Egypt due to the lack of an electric vehicle (EV) policy in the country, Sunday Times reports.
Martina Biene, managing director and chair of Volkswagen South Africa, warned that the delays could mean the country will miss out on securing future investment in its motor industry.
“Electric-vehicle policies are popping up everywhere. Egypt has one, and even Ethiopia, a country that is not known for automotive industrialisation as South Africa is, has an EV policy,” Sunday Times quoted Biene as saying.
She added that, from Volkswagen’s perspective, prioritising countries with EV policies is critical, and as a result of the government’s delays, South Africa doesn’t feature high up on the list.
Biene said Volkswagen is still committed to production in South Africa. However, it requires a business case to manufacture 50,000 to 60,000 EVs to invest accordingly.
She added that while indications now point to the finalisation of the policy by 1 November 2023, the production of EVs in South Africa for export is still a long way away.
If proven true, the new finalisation date will be sooner than Ebrahim Patel, Minister of Trade, Industry and Competition, announced in April 2023.
During a Parliamentary meeting, Patel said the department will finalise its EV strategy by the end of the 2023/24 financial year, which runs until 31 March 2024.
His announcement came after motor industry leaders, including the National Association of Automobile Manufacturers of South Africa (Naamsa), called upon government to announce its intentions for EV production in the country.
Naamsa president Neale Hill said manufacturers would not be guaranteed to invest in South Africa, and continued delays wouldn’t help the issue.
“South Africa has already missed the upcoming round of EV model investment, for which the decision date is three years before start of production, and realistically will only be considered for the next round of investment around 2030,” he said.
Malebo Mabitje-Thompson, director-general at the Department of Trade, Industry, and Competition (DTIC), said government made it clear that it favours a manufacturing-focused approach.
“We want to ensure that what the transition doesn’t do is undo all the benefits we have built together as partners,” said Mabitje-Thompson in reference to car manufacturers.
Some of the world’s most prominent vehicle manufacturers produce cars in South Africa, creating many jobs in areas like East London and Kariega (formerly Uitenhage).
The lack of government policy on EVs in South Africa puts the country at risk of losing brands like Mercedes and Volkswagen.
Earlier in April, BMW announced its intentions to manufacture EVs in the country and said it was engaging government regarding EV policy.
Peter van Binsbergen, CEO of BMW South Africa, said the move would help BMW secure long-term production in the country.
The carmaker said it was upgrading its Rosslyn facility to allow for the flexibility it would eventually need to manufacture EVs, but it requires a policy decision before it can make a business case for EV manufacturing in South Africa.
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