IN his address at SA Auto Week held at the Cape Town International Convention Centre last week, President Cyril Ramaphosa acknowledged the sizeable contribution the sector makes to the country’s economy, its roots in the Eastern Cape and the local industry’s need to adapt to increasing demand for new energy vehicles (NEV).
Ramaphosa said that international auto companies are major investors in the South African economy and had consistently featured prominently at the annual South Africa Investment Conference inaugurated in 2018.
He said that over the past few years, these companies had invested an average of R8 billion a year and component suppliers had invested R4 billion on average a year.
“Industry giants like Ford, VW, BMW, Toyota and others continue to demonstrate confidence in our economy by expanding and upgrading existing operations,” he said.
He ascribed the growth of the automotive sector since the advent of democracy to the success of transformative industrial policy.
“We have pursued an industrial policy underpinned by increased value-addition. Through our support programmes and master plan, we have strived to ensure that the automotive sector is stronger, globally competitive and transformed.
“Through the automotive master plan, we aim to increase the industry’s contribution to global production and increase local content to 60 percent,” he said.
Ramaphosa said the government aims to bring new companies into the value chain and increase value addition.
Acknowledging headwinds faced by the sector, Ramaphosa said the global transition towards decarbonisation presents a fundamental challenge to the industry.
“The transition towards cleaner and more sustainable fuels – together with stringent regulations in key markets – puts a number of automotive firms and sub-industries in a vulnerable position. Even as the journey to net zero poses a challenge for the auto industry, there is at the same time immense opportunity.”
He said the local automotive sector needs to position itself to take advantage of the demand for electric vehicles, new energy vehicles and sustainable fuels.
“The transition to cleaner, more sustainable practices in the automotive industry is a priority for our government,” Ramaphosa said, adding that the automotive industry has a critical role to play in achieving South Africa’s climate targets.
“We are committed to working hand-in-hand with the private sector to promote the production of New Energy Vehicles and the development of the necessary infrastructure to support them,” he said.
He referred to his speech at the Opening of Parliament Address in July when he said that South Africa will look to beneficiate more of its critical minerals instead of them leaving the country in raw form.
He said it is encouraging that the Department of Trade, Industry and Competition, together with National Treasury and the Department of Mineral and Petroleum Resources are in conversation about implementing the Electric Vehicle White Paper.
“This work includes the beneficiation of our critical minerals for the production of new energy vehicles and their associated value chains. It also includes the production of batteries for battery electric vehicles and the development of value chains in the green hydrogen fuel cell market.
“We are working to finalise comprehensive NEV policy guidelines that do not exclude alternative technologies such as hybrids and plug-in hybrids.
“Consideration must be given to incentives for manufacturers as well as tax rebates or subsidies for consumers to accelerate the uptake of electric vehicles.
“This is not just about creating a greener future but also about ensuring South Africa remains competitive in the global market,” said Ramaphosa.
He recognised that many of South Africa’s major trading partners are rapidly shifting towards EVs, making it imperative that South Africa remains part of this global supply chain.
“This is a major industrialisation opportunity for South Africa and the region, particularly within the context of the African Continental Free Trade Area. This will position South Africa as a forward-thinking, green economy. It will advance our aspirations to be a global automotive hub,” he said.
He said the government remains firmly committed to the work already underway to improve the operational performance of the country’s energy, freight and logistics sectors – all of which directly impacts the automotive industry.
Focussing on logistics, he said Transnet is working to revitalise the Port of Durban and also proceeding with the upgrade of the Gauteng-Eastern Cape railway line as part of Project Ukuvuselela.
