Imported light vehicle models have averaged 55% of annual new vehicle sales over the past decade, with domestic manufactured models’ share declining to 45% as demanding consumers want access to the wide variety of the latest models available globally. In 2023, 76,9% of passenger cars were imported, however, the South African motor industry achieved record vehicle production of 633 332 units. Imports contribute to the intensely competitive new vehicle market and in 2023 there were 46 passenger car brands with 2 172 model derivatives, the greatest selection of choices compared to market size in the world. Despite the wide variety of choices, eight of the top 10 selling models were locally manufactured. India was the top country of origin for vehicle imports comprising 53,2% as India has been established as the global hub for small and entry level vehicles by global brands which comprise the bulk of sales in the domestic market. Chinese vehicle imports have also increased as affordability is driving new vehicle sales in line with the weak economic climate in the country. The US and the EU have recently imposed severe import duty penalties on cheap Chinese EV imports into their markets. The question now arise, should the South African government and the industry be concerned about the surge in imports from China and India or rather regard this as an opportunity for market adoption of electric vehicles in South Africa and rather collaborate, especially with China, for new investments in EVs and EV battery technology.
South Africa’s transition to New Energy Vehicles (NEVs) presents a complex policy landscape where choices and support instruments must be carefully balanced to drive sustainable growth in the automotive industry. Key policy choices involve deciding on the most effective incentives to encourage NEV adoption, such as tax breaks, subsidies, or infrastructure development. Support instruments might include financing schemes for manufacturers, investments in charging infrastructure, and fostering local supply chains for NEV components. However, these choices come with significant risks, including the potential for economic disruptions if traditional vehicle manufacturing is not adequately integrated into the transition, the risk of insufficient grid capacity to support widespread NEV adoption, and challenges in maintaining global competitiveness. Policymakers must navigate these factors to ensure a smooth and equitable transition while minimizing negative impacts on jobs, industry stability, and energy security.
The global automotive market is shifting towards increased adoption of New Energy Vehicles [NEVs]. Strict regulatory requirements such as the Paris Climate Agreement as well impending bans on Internal Combustion Engine [ICE] vehicles in key South African export markets have resulted in OEMs increasing their NEV product portfolios. For South African-manufactured vehicles to remain competitive in this new landscape, the development and localisation of the battery value chain is an imperative for the sustainability of the sector. This panel discussion will unpack key trends and developments in global battery value chains and earmark strategic investment opportunities for the South African automotive sector considering critical raw material availability in the region.