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Most NEVs are electric vehicles (EV), but the broader term includes hydrogen and other forms of clean emission propulsion. The department of trade, industry & competition published an NEV green paper in May 2021 and was due to follow it up with a policy white paper later that year.

After several delays, the motor industry was finally told to expect a policy announcement in last week’s budget. So confident was it that two days before finance minister Enoch Godongwana stood up to speak, Naamsa published its own NEV thought leadership document to stimulate policy debate.

But the budget contained a single sentence on the matter, that R728.8m had been “allocated to support NEV initiatives”. This would be managed within the existing Automotive Production and Development Programme (APDP) and its automotive investment scheme, which allows vehicle and component firms to claim back a portion of production-related investments.

On policy, however, there was not a mention, and the government has offered no explanation. Volkswagen SA (VWSA) MD Martina Biene called it a “wasted opportunity” and said foreign companies might wonder if SA is ready for a future with EVs. Some are already asking the question because of persistent load-shedding.

Naamsa CEO Mikel Mabasa said members were “utterly disappointed” at the lack of action after ministerial promises of a “clear policy signal”.

An urgent Naamsa meeting has been called for later this week “to focus on how SA should move forward with or without the support of government, who have made it clear to all of us that they are working off a different timeline to the rest of us, and to the rest of the world”.

Renai Moothilal, director of the National Association of Automotive Component and Allied Manufacturers (Naacam), was more conciliatory, welcoming the budget’s R728.8m allocation to NEV initiatives.

“Naacam understands this to be part of the overall strategy to support NEV production in SA. It looks forward to announcements of other policy interventions that should complement the capital investment support as part of a holistic approach to the country moving into EV production,” Moothilal said.

While acknowledging the sum as a first step, Mabasa said: “Nothing replaces a clear policy pronouncement which everyone understands and can embrace to help [vehicle manufacturers] recalibrate and build their investment and business cases for the long term.”

The APDP does not distinguish between internal combustion engine (ICE) and NEV technologies, and the same manufacturing incentives are available to both.

Naamsa argues that, to hasten the shift, NEV investments should get more. It also wants the government to reduce import duties on fully built NEVs and temporarily suspend duties on some critical components for local assembly.

Business Day sent questions to the Treasury and the department of trade, industry & competition on Friday, seeking reasons for the latest policy delay and asking when the motor industry might have certainty. Both departments acknowledged receipt, but no answers had been received by 5pm on Monday.

Frustration among industry executives is palpable. Nearly all vehicles built in SA use petrol- and diesel-burning ICEs. But more than half the industry’s total production is exported to the UK and EU, which will ban the sale of new ICE vehicles in the coming years. Some other export markets have similar plans. In some countries, the start of the transition period is only three years away. The final cut-off date for most is 2035.

Most car models have a life cycle of about seven years. For bakkies, it is closer to 10, so the clock is already ticking for investment decisions by SA companies and their Japanese, German and US owners.

The transition to NEV does not have to be absolute; some export markets, such as SA itself, will have a mix of technologies for years to come, but the prospect of losing more than 50% of current sales is unthinkable for most companies.

However, it is not all about exports. Most multinational corporations expect solid local demand for their products where they are made. VWSA makes no EVs now, but Biene hopes that by 2035 the carmaker will sell at least 40,000 home-made vehicles in SA every year. Globally, VW is a leader in EV technology.

“I don’t want to lose my local sales footprint. We can’t afford to be left out of the EV journey,” Biene said.

Currently, only two of SA’s major vehicle manufacturers make EVs. Toyota SA makes the Corolla Cross traditional hybrid, in which a petrol engine continuously regenerates an electric motor. The second is Mercedes-Benz SA (MBSA), which manufactures a C-Class plug-in hybrid, the electric motor of which needs recharging from an external power source. None makes ICE-free, all-electric vehicles.

MBSA joint-CEO Mark Raine said: “We are at a crucial juncture for the automotive industry in SA, and the protracted announcement of the NEV policy poses a challenge to the transformative advancement of the automotive landscape. To enable and accelerate SA’s NEV market, we need a proactive and decisive approach [towards] a definite policy framework.”

In its discussion document, Naamsa reveals that together with the government, it hopes EVs could account for 20% of SA’s new-vehicle market by 2025, 40% by 2030 and 60% by 2035. In 2022, the share was less than 1%.

In nearly all countries where EV sales have flourished, they have been encouraged by generous price reductions through tax cuts and other incentives. Given SA’s parlous financial position, and the potentially unquantifiable costs if millions of motorists were to go electric, trade, industry & competition minister Ebrahim Patel has hinted that the government’s preference is for manufacturing incentives — even though Naamsa says its members are prepared to match any consumer discount.

It says both types of discount are necessary, along with rapid growth in the country’s EV charging infrastructure — which could cost up to R30bn by 2035 if Eskom can get its act together, and R90bn if it cannot.

furlongerd@businesslive.co.za

Motor companies are spitting mad at the government’s latest failure to come up with a policy to encourage the local manufacture and sale of new energy vehicles (NEV). They warn that multinational motor companies could lose faith in SA as an automotive investment destination.

Most NEVs are electric vehicles (EV), but the broader term also includes hydrogen and other forms of clean-emission propulsion. The department of trade, industry & competition published an NEV green paper in May 2021 and was due to follow up with a policy white paper later that year.

After several delays, the motor industry was finally told to expect a policy announcement with last week’s budget. It was so confident that two days before finance minister Enoch Godongwana stood up to speak, Naamsa published its own NEV thought leadership document to stimulate policy debate.

But the budget contained only a single sentence on the matter, which stated R728.8m had been “allocated to support NEV initiatives”. This would be managed within the existing Automotive Production and Development Programme (APDP) and its automotive investment scheme, which allows vehicle and component companies to claim back a portion of production-related investments.

Of policy, however, there was not a mention, and the government has offered no explanation.

Volkswagen SA (VWSA) MD Martina Biene called it a “wasted opportunity” and said foreign companies might wonder if SA was ready for an EV future. Some were already asking the question because of load-shedding.

Naamsa CEO Mikel Mabasa said members were “utterly disappointed” at the lack of action after ministerial promises of a “clear policy signal”. An urgent Naamsa meeting has been called for later this week “to focus on how SA should move forward with or without the support of government, who have made it clear to all of us that they are working off a different timeline to the rest of us, and to the rest of the world”.

Renai Moothilal, director of the National Association of Automotive Component and  Allied Manufacturers (Naacam), was more conciliatory, welcoming the budget’s R728.8m NEV allocation.

“Naacam understands this to be part of the overall strategy to support NEV production in SA. It looks forward to announcements of other policy interventions that should complement the capital investment support as part of a holistic approach to the country moving into EV production,” Moothilal said.

While acknowledging the sum as a first step, Mabasa said: “Nothing replaces a clear policy pronouncement which everyone understands and can embrace to help [vehicle manufacturers] recalibrate and build their investment and business cases for the long term.”

The APDP does not distinguish between internal combustion engine (ICE) and NEV technologies, and the same manufacturing incentives are available to both.

Naamsa argues that, to hasten the shift, NEV investments should get more. It also wants the government to reduce import duties on fully built NEVs and temporarily suspend duties on some critical components for local assembly.

Business Day sent questions to the Treasury and the  department of trade, industry & competition on Friday seeking reasons for the latest policy delay and asking when the motor industry might have certainty. Both departments acknowledged receipt, but no answers had been received by 5pm on Monday.

Frustration among industry executives is palpable. Nearly all vehicles built in SA use petrol- and diesel-burning ICEs. But over half the industry’s total production is exported to the UK and EU, which will ban the sale of new ICE vehicles in coming years. Some other export markets have similar plans. In some countries, the start of the transition period is only three years away. The final cut-off date in most is 2035.

Most car models have a life cycle of about seven years. For bakkies, it is closer to 10, so the clock is already ticking on investment decisions by SA motor companies and their Japanese, German and American owners.

The transition to NEV does not have to be absolute; some export markets, such as SA itself, will have a mix of technologies for years to come, but the prospect of losing more than 50% of current sales is unthinkable.

However, it is not all about exports. Most multinationals expect solid local demand for their products where they are made. VWSA makes no EVs now, but Biene hopes that by 2035 the carmaker will sell at least 40,000 home-made vehicles in SA every year. Globally, VW is a leader in EV technology.

“I don’t want to lose my local sales footprint.  We can’t afford to be left out of the EV journey,” Biene said.

Now, only two of SA’s major vehicle manufacturers make EVs. Toyota SA makes the Corolla Cross traditional hybrid, in which a petrol engine continuously regenerates an electric motor. The second is Mercedes-Benz SA (MBSA), which manufactures a C-Class plug-in hybrid, electric motor of which needs recharging from an external power source. None makes ICE-free, all-electric vehicles.

MBSA joint-CEO Mark Raine said: “We are at a crucial juncture for the automotive industry in SA, and the protracted announcement of the NEV policy poses a challenge to the transformative advancement of the automotive landscape. To enable and accelerate SA’s NEV market, we need a proactive and decisive approach [towards] a definite policy framework.”

In its discussion document, Naamsa reveals that together with the government it hopes EVs could account for 20% of SA’s new-vehicle market by 2025, 40% by 2030 and 60% by 2035. In 2022, the share was less than 1%.

In nearly all countries where EV sales have flourished, they have been encouraged by generous price reductions through tax cuts and other incentives. Given SA’s parlous financial position, and the potentially unquantifiable costs if millions of motorists were to go electric, trade, industry & competition minister Ebrahim Patel has hinted that the government’s preference is for manufacturing incentives — even though Naamsa says its members are prepared to match any consumer discount.

It says both types of discount are necessary, along with rapid growth in the country’s EV charging infrastructure — something that could cost up to R30bn by 2035 if Eskom can get its act together, and R90bn if it cannot.

Article sourced from David Furlonger: https://www.businesslive.co.za/bd/national/2023-02-27-motor-industry-alarmed-by-lack-of-spark-on-electric-vehicle-policy/