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South Africa’s main export markets for cars are looking to reduce imports of petrol and diesel cars in the next 10 years, which means boosting skills in electric vehicle manufacturing is essential for safeguarding jobs and the economy in this country.

With three out of every four vehicles that South Africa exports destined for the EU and the UK – which have set bans on the sale of new internal combustion engine vehicles (ICEVs) from 2035 – the country’s automotive industry faces a critical moment.

Without a decisive shift towards electric vehicles (EVs), South Africa risks losing its competitive edge in global markets, threatening more than 100,000 direct jobs and more than 300,000 jobs across the broader sector.

In recent years, vehicle manufacturers in South Africa have started making tentative steps towards electrification. In October 2024, BMW started the production of a plug-in hybrid electric vehicle (PHEV) – the X3 30e xDrive – at its Rosslyn plant north of Pretoria.

Despite EV sales growing globally, South Africa’s EV market remains in its infancy. Before the BMW PHEV, only Toyota manufactured the Corolla Cross Hybrid at its Prospecton plant in Durban, while Mercedes-Benz built the C-Class plug-in hybrid at its East London facility, producing the C350e for local and export markets. Ford is investing R5.2-billion in the Silverton Assembly Plant in Pretoria for production of the first Ford Ranger plug-in hybrid from late 2024.

Shivani Singh, chief projects officer at the Automotive Business Council (Naamsa), agreed that companies like Toyota and BMW producing EVs locally achieves a few things:

“It ensures that we have adapted a product to changing consumer needs. It sends a strong signal to the global market about the technical capabilities of SA OEMs [original equipment manufacturers] to assemble and export these new technologies,” she said.

“It illustrates that SA OEM operations are important role players in their global groups and are being prioritised for new investments,” she added, explaining that automotive investments are usually long term and have a trickle-down effect on the value chain, “so this development provides certainty for the value chain.

“I also think it is illustrating that our OEMs are committed to supporting the NEV [new energy vehicle] transition and are committed to the provision of greener transport solutions.”

Why South Africa needs to electrify our private vehicles

In South Africa, the transport sector accounts for about 12% to 14% of South Africa’s total CO2 emissions – the biggest emitter after the power industry.

But within this sector passenger cars are a major contributor, especially in urban areas. For example, in Gauteng, private cars account for 68.8% of CO2 emissions from passenger transport. The remaining emissions come from taxis (22.8%) and buses (3.3%). In Cape Town, private cars are responsible for an even higher percentage, at 86%. Minibus taxis contribute 7%, buses 4% and motorcycles 1%.

This makes electrifying the transport sector – particularly private cars – a crucial step in lowering emissions.

The BMW X3 30e xDrive produces fewer emissions than its internal combustion engine counterparts. It can travel up to 90km in all-electric mode before switching to its petrol engine, reducing its reliance on the latter, especially in cities.

Since the start of production in October 2024 it has driven a 45% increase in the monthly retail rate of PHEVs globally, demonstrating its significant market impact.

However, manufacturing PHEVs in South Africa is a step in the right direction since local production contributes to skills development in EV manufacturing, which is seriously at risk if South Africa doesn’t catch up.

Two-thirds (66.5%) of light vehicles produced in South Africa are exported overseas (to 148 countries) according to the Automotive Trade Manual 2024, published by Naamsa.

Four of the country’s seven vehicle manufacturers export more than half of their production overseas, where the shift to electric vehicles is accelerating.

‘The workforce of tomorrow needs to keep pace with these trends’

With South Africa’s automotive industry heavily reliant on exports, more than 100,000 direct jobs and more than 300,000 jobs in this auto manufacturing industry are at stake.

More than 700 associates at BMW Group Plant Rosslyn were trained to prepare for the introduction of the next-generation BMW X3 – more than 300 of which were trained specifically to support the production of the next-generation BMW X3 plug-in hybrid. In 2018, the company opened a refurbished training academy at the Rosslyn plant.

This is significant as the automotive industry contributed 5.3% to South Africa’s GDP in 2023 – 3.2% from manufacturing and 2.1% from retail.

Singh pointed out that for the same period, 21.9% of value addition from domestic manufacturing output originates from vehicle and automotive component manufacturing – making the automotive sector the largest manufacturing sector.

“Vehicle exports, a crucial element of the domestic OEMs’ financial viability and sustainability, remained resoundingly positive, and continued their upward momentum in 2023.”

Exports reached an all-time high of 399,594 units last year, reflecting a 13.6% increase compared with 2022. Passenger cars accounted for 64.6% of exports, while light commercial vehicles comprised 35.2%.

The European Union (EU) and the UK remained South Africa’s largest trading regions in 2023, accounting for R147.1-billion (54.3%) of total automotive exports valued at R270.8-billion.

“These markets both have goals to reduce the imports of ICEVs in the next 10 years,” Singh said. Which meant “building up skills in electric vehicle manufacturing is essential for safeguarding jobs and the economy in South Africa”.

Policies and tax incentives driving change

Norman Lamprecht, the executive manager of trade, research and exports for Naamsa, previously told Daily Maverick that one of the inhibitors in South Africa catching up in the race to electrify is a lack of policy incentives from the government.

“In many other countries in the world the governments provide an incentive such as cash grants or tax benefits to reduce the price gap in order to stimulate sales of EVs,” said Lambrecht.

But in November 2023, the Department of Trade, Industry and Competition finally published the Electric Vehicles White Paper, acknowledging the “major industrialisation opportunity” for South Africa to develop regional value chains.

Yael Shafrir, associate director at Webber Wentzel, notes the white paper’s outlined actions, including increasing investment and funding, facilitating an electric battery regional value chain, and introducing a temporary reduction of import duties for batteries.

Tax incentives are also being introduced to encourage EV manufacturing. The Taxation Laws Amendment Bill, signed into law in December 2024, includes section 12V, which provides a 150% tax deduction for certain assets used in the production of electric battery-powered or hydrogen-powered vehicles. DM

Article sourced from Julia Evans: https://www.dailymaverick.co.za/article/2025-03-05-bmws-electric-car-move-flags-need-for-sa-to-adapt-to-ev-transition/