South Africa and Europe should collaborate on building an alternative "value chain" for electric vehicle components such as batteries, to reduce dependence on China, the CEO of BMW South Africa said, calling for a national-level strategy.
A worker cleans a BMW i7 xDrive60 elecric car while it is charging at a BMW dealership in Sandton, South Africa, on 27 October 2023. Reuters/Siphiwe Sibeko
South Africa, which accounts for 51% of Africa's vehicle output, is seeking to position itself as a player in the global EV supply chain. But industry leaders say more policy clarity and investment are needed to unlock its potential.
"South Africa, together with Europe, could put a strategy together to create an alternative value chain for EV batteries, for example," Peter van Binsbergen said in an interview on Wednesday on the sidelines of an auto conference. "That gives the world an alternative to China."
China currently dominates global battery cell production, making it difficult for some automakers to meet rules of origin requirements for exports, particularly in Europe.
"If you want a battery, it comes from China," van Binsbergen said. "We need to get that right."
South Africa is Africa's biggest auto manufacturing hub. Global automakers like Ford, Volkswagen, BMW and Toyota manufacture models in South Africa for both the local and European markets.
Britain and the European Union together consume nearly half of the vehicles South Africa produces.
South African car industry executives want a coordinated national approach to EV development, saying that efforts by individual brands will not be sufficient.
Neale Hill, President of Ford Motor Company Africa, said automakers are concerned that the country's new energy vehicle roadmap is not moving, despite President Cyril Ramaphosa having announced potential consumer subsidies and stating that hybrids and plug-in hybrids should be included in planned production incentives last year.
"In stark contrast to our lack of progress, consider a country like Ethiopia, which has already over 100,000 EV vehicles on the road versus just over 4,000 in South Africa," Hill said.
There is a need for urgency as the UK and the European Union have committed to ending the sale of new fossil-fuel vehicles by 2035.
The South African government has already announced a 150% tax deduction from next year for qualifying investments in EV and hydrogen vehicle production, Trade Minister Parks Tau told delegates on Thursday.
South Africa, in partnership with international partners including the World Bank, has also developed a national critical minerals strategy aimed at securing supply chains for the local electric vehicle industry, attracting investment into battery manufacturing facilities as well as EV components.
"If we do not adapt, we risk losing these key export markets," Tau said.
