Slow Progress on Electric Vehicles Is a Bad Sign for South Africa’s Automobile Industry

According to Nissan Motor Co.’s Africa leader, South Africa is at the risk of losing the bulk of its automotive shipments unless the government implements plans to build an electric-vehicle (EV) manufacturing sector.

About two-thirds of South Africa’s car exports go to Europe, with the country earning $14 billion (202 billion rands) from selling vehicles and components overseas in 2019. However, with nations like Germany moving toward requiring the use of cleaner automobiles, Mike Whitfield, Nissan Africa’s managing director, stated in an interview that South Africa risks falling behind.

“A major portion of our industry’s exports go to Europe, and while Europe is rapidly shifting to electric, we are not,” noted Whitfield, who also serves as the president of the African Association of Automotive Manufacturers. “We’re going to lose our prospective markets one by one.”

South Africa depends on the automobile industry for around 15 percent of its exports as well as has enticed big manufacturers like Toyota Motor Corporation and Volkswagen AG to put up local operations with a government incentive program. Nonetheless, the country is still a long way from deploying electric vehicles to its roadways on a large basis. Unlike typical gas and diesel-fueled vehicles, which can be imported duty-free, electric vehicles (EVs) are subject to a 25% duty and there are limited charging points.

“You’re not going to get electric vehicle industrialization until there’s demand,” Whitfield added. He stated, “We need the charging infrastructure” and “incentives to buy.”

He claims that the remainder of Africa, including car making hotbeds like Egypt and Morocco, has been hesitant to promote production.

 

African Possibilities

 

One reason for confidence in Africa is that novel automobile sales are likely to increase to as many as 5 million per year by 2035, up from 1.2 million in 2015, which might offset decreases in the export market of Europe, he noted.

“The goal is to shift and retain the market in Europe,” Whitfield explained. “This obviously necessitates investment as well as certain regulatory and approach modifications.¬† Add to that the African market’s potential.”

Nissan opened an assembly factory in Ghana last month, using components from South African facilities, and he said the company is thinking about joining East Africa with a partner.

Due to the enormous import of used automobiles, Nigeria, Africa’s most populous country with over¬†200 million people, is unlikely to contribute to the continent’s market development. An automobile policy that includes tariffs on used cars was never completely enforced, and new vehicle sales have dropped to as low as 10,000 per year.

“We have to keep talking about affordability,” Whitfield said. “At the moment, used vehicles perform that duty.”

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