Imminent electric vehicle policy makes auto industry jittery

SA’s transition towards electric vehicles is a critical step, says the automotive industry.
South Africa’s imminent national policy on new energy vehicles (NEVs) is a step in the right direction; however, the automobile industry is concerned about its lack of emphasis on stimulating consumer demand for NEVs.

This was the word from Mikel Mabasa, CEO of the National Association of Automobile Manufacturers of SA (NAAMSA), speaking to ITWeb on the side-lines of the recent SA Auto Week event, organised by NAAMSA, also known as the Automotive Business Council.

The transition towards NEVs is a critical step to secure the future of the automotive industry in SA, so the policy should speak to the current barriers to adoption, he explained.

The long-awaited EV policy is expected to be delivered next week, when finance minister Enoch Godongwana tables the Medium-Term Budget Policy Statement in Parliament on 1 November, according to Mabasa.

The industry has over the years made several calls to urge government to hasten the policy. It warned that the lack of a regulatory framework could result in SA facing the threat of losing significant investment from local multinational players, such as BMW, Toyota and Mercedes-Benz SA – which have announced local plans for EV production and sales.

In 2021, the Department of Trade, Industry and Competition (DTIC) announced the Auto Green Paper, which focuses on the advancement of NEVs and battery-electric vehicles in SA.

In May 2021, the draft policy was gazetted for public comment and the policy proposals were submitted to Cabinet for consideration by October 2021.

While NAAMSA believes there has been progress on some of the policy statutes over the years, it believes there is room for improvement, particularly regarding commitment from government to enable a conducive market for increased adoption of NEVs.

“We are awaiting the formal policy pronouncements from the minister of finance on 1 November and later from the minister of trade, industry and competition, to better understand the commitments government is prepared to make.

“We do know that currently government will be announcing their stimulation support to promote production of NEVs in the country, but they are not talking about consumer demand stimulation and how they will support consumer demand.

“While we are encouraged that something is happening, we are not happy that there will only be one element of the announcement, which supports only the supply and leaves out the demand element, because we believe the two should be complementary,” commented Mabasa.

While several due processes should take place before the policy is enacted into law, NAAMSA believes in the interim, sufficient budget should be allocated to the industry to create a solid foundation for the roadmap to implement the NEV policy.

This should include funding for the local manufacturing of NEVs, as well as incentives such as tax exemptions for imported NEV vehicles and components, which will in turn boost consumer adoption, according to Mabasa.

Delivering a presentation at SA Auto Week, NAAMSA president Neale Hill emphasised the importance of a balanced policy that focuses on the supply stimulation element for automotive businesses, as well as demand stimulation from a consumer perspective. According to NAAMSA, the local automotive industry employs 497 408 people formally and informally, which is 2.9% of the 16.2 million people employed in SA.

SA’s auto industry also exports products to 152 markets and generated R227.3 billion in export revenue for the country last year, it says.

Imminent electric vehicle policy makes auto industry jittery | ITWeb