Elon Musk’s home town of Pretoria recently hosted the Smarter Mobility Africa 2019 Summit, where the future of South Africa’s automotive manufacturing industry was one of the major sessions. According its website, “Smarter Mobility Africa brings together mobility thought leaders from business and government to consider, collaborate, co-create and consolidate efforts for accelerating the transition to electric and smart mobility.” Some of the discussions zoned in on how international markets are preparing for the transition to electromobility and how South Africa’s motor vehicle manufacturing industry could be impacted by this shift.
Pretoria hosts several vehicle manufacturing plants, including plants for BMW and Ford. Along with factories on the coast of South Africa, these plants produced 610,854 vehicles in 2018, all of which were internal combustion engine vehicles. 58% of these vehicles were for the export market. As developed nations forge ahead with plans to increase the share of electric vehicles on their roads, how ready is South Africa to service these markets? Vehicles and components manufactured in South Africa reach 155 markets, according to the National Association of Automobile Manufacturers of South Africa (NAAMSA). These same export markets are looking to cut back on new internal combustion engine vehicle sales and the South African motor manufacturing industry risks losing market share. The automobile industry contributes 13.9% of South Africa’s export earnings. South Africa earns around R164.9 billion ($11.15 billion) from vehicle exports. With the vehicle manufacturing industry also contributing 7% GDP and employing over 112 000 people, the industry is of such strategic importance that it is critical that the key decision-makers prioritize its preservation and ultimately its growth.
On average, the local component portion in vehicles made in South Africa is currently at 38%. The government has a goal of increasing the local component share to 60% by the year 2035! 2035 is an interesting year as many nations, many of whom would feature prominently on the list of 155 export destinations, have declared caps on new internal combustion vehicle sales from as early as 2021. With fewer moving parts in EVs, electric vehicles seem to present a faster way of achieving this South African target. However, having invested over R32 billion ($2.16 billion) in plant upgrades to the internal combustion vehicle production lines over the past 5 years, South Africa’s vehicle manufacturing plants may want to recoup some of that investment first. This presents a major headache on when to take the plunge. Mercedes-Benz invested R10 billion ($680 million) at its East London factory to get it ready for the current generation C-Class. BMW spent R6.1 billion ($410 million) upgrading its Rosslyn Plant in Pretoria to produce the new-generation X3.
The Rosslyn Plant had previously been producing the iconic 3 Series for over 35 years, 5 generations of the 3 Series. In that time, the plant produced over 1,100,000 units of the 3 Series. Production of the 3 Series has since been shifted to Mexico. Perhaps this is a blessing in disguise for South Africa and a potential advantage for BMW amongst all of the 7 vehicle assemblers and manufacturers. South Africa hosts BMW South Africa (Pty) Ltd, Ford Motor Company of Southern Africa (Pty) Ltd, Isuzu South Africa (Pty) Ltd, Mercedes-Benz SA Ltd, Nissan South Africa (Pty) Ltd, Toyota South Africa Motors (Pty) Ltd, and Volkswagen Group South Africa (Pty) Ltd . With the all-electric BMW iX3 believed to be built on the same platform as the BMW X3, this presents an easy opportunity for BMW South Africa to build the iX3 and export to the same European destinations where the X3 is going. If they export the X3 to Norway, they better start thinking of switching to the iX3 faster than Bjorn Nyland can pack banana boxes into a fiat 500e!
The BMW i3 has been the only EV model that has been consistently available on the South African market since 2015. Introduction of the iX3 would cement BMW’s leadership in the South African EV landscape. The iX3 would appeal to many of their loyalists and, being in the popular small SUV/crossover segment, it could be a gamechanger in the South African EV space.
The Mercedes-Benz plant in East London could also quickly add plug-in hybrid versions of the C-Class. We would ideally like to see more fully electric vehicles, but any savings on fossil fuel derived from plug-in hybrids would be welcome. South Africa’s EV charging network continues to grow. Jaguar’s Powerway and the GridCars network are some of the leaders. Nonetheless, plug-in hybrids have their place in today’s environment to attract those potential buyers still harboring fears of range anxiety on South Africa’s vast road network.
The Ford factory in Pretoria makes the famous Ranger Bakkie (pickup truck), but it may be a bit far off from incorporating any synergies with US startup Rivian. The VW plant manufactures the popular Polo and Polo Vivo city cars. In the absence of electric variants, VW may also be a bit far off from introducing EV models made in South Africa. Maybe its time to look into building the VW e-Up! on the South African coast.
Then there is Nissan South Africa. In rather disappointing news, Nissan has hinted that the new Nissan LEAF would be available in South Africa as late as 2021! This is probably due to the punitive prevailing import taxes for EVs in South Africa. This may also be an indicator that they are not making any plans to start assembling the new LEAF in South Africa anytime soon. Nissan currently produces the NP200 and NP300 pickup trucks, the Nissan Livina, and the Renault Sandero.
Just like in the USA, the pickup truck segment is a popular segment in South Africa. Isuzu South Africa makes the Popular KB (D Max) pickup truck series. In the absence of a mass produced EV variant, Isuzu will not be producing any EVs in South Africa anytime soon.
And then there is Toyota! Well, Toyota is still the main cheerleader for hydrogen fuel cell vehicles. With South Africa being the leading producer of platinum group metals, key components in fuel cell vehicles, one would think Toyota South Africa would push its Mirai in the region. Currently in production in SA are the Fortuner SUV, the Quantum minibus, the Corolla, and the ever popular Totoya Hilux pickup truck. Again, in the absence of all-electric variants of these models, it looks like it will be a long time before Toyota South Africa and the majority of the motor vehicle manufacturing plants start manufacturing EVs in South Africa.