EV transition will ‘take time’ as DTIC releases White Paper Report

The Department of Trade, Industry and Competition, on Monday, officially set into plans its support for new energy vehicles with the release of the so-called White Paper report on EVs.

Need for change

Released amidst recent criticism from major brands, Volkswagen and Ford, regarding the worsening energy crisis and logistical challenges at the country’s major ports and dilapidated rail infrastructure, the document, tabled by Minister Ebrahim Patel, is said to represent a “comprehensive, co-ordinated approach to the transition” to new energy vehicles, with additional emphasis on local production.

The next phase of government’s plan following the release of the initial Green Paper in 2019, the document states that manufacturing of alternative energy vehicles will be key in helping to grow the automotive industry by an additional one percent of global output, while also doubling employment, upping local content and help keep the local industry competitive against global markets.

“The combined impact of the above factors has meant a slow uptake of EVs in South Africa. In 2022, 4 674 EVs were sold in South Africa, 0.9% of total sales in that year,” an extract from the document read.

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“This creates tension in the transition trajectory of the South African market relative to the local automotive manufacturing industry’s key export markets, the UK and EU,”

“As South Africa’s most successful non-commodity manufacturing industry, it is critical to the domestic economy that the automotive industry achieve its potential through to 2035 and beyond. A failure to transition risks a decline in the contribution of the industry to the economy,” it says in reference to the banning of combustion engine vehicle sales in Europe by said year.

In releasing the document, Patel, via sanews.gov.za, described it as a, “product of constructive engagement with stakeholders, including within government, industry and labour, to chart a viable and sustainable transition path for the industry”.

Focus points

In total, 16 points have been drawn-up in the document aimed at improving new energy vehicle uptake and development, namely:

• Facilitation and development of an electric battery regional value chain;
• Increase in levels of investment and funding;
• Introduction of a temporary reduction on import duties for batteries in vehicles produced and sold in the domestic market;
• Securing or maintaining duty-free export market access for vehicles and components produced in South Africa;
• Implementing energy reforms;
• Commercialising green hydrogen production in South Africa;
• Implementing reforms to network industries, including freight rail and ports;
• Leveraging R&D tax incentives to deepen domestic value addition;
• Refurbishing the rail line between Gauteng and Ngqura to improve overall cost competitiveness;
• Developing an EV certification programme in collaboration with industry for skills development;
• Developing and implementing a framework for fleets to transition to South African-produced new energy vehicles;
• Scale up investment in charging infrastructure;
• Developing an EV certification programme;
• Supporting increased grid capacity to facilitate uptake of EVs.;
• Consider consumer incentives for adoption of EVs;
• Evaluating the need for economic regulation on EV charging

“The 16 actions will require all stakeholders to contribute to their implementation. This includes government departments and agencies, as well as industry.

“A key tenet of success will be the appropriate alignment of interventions which will be facilitated through the South African Automotive Masterplan oversight bodies,” the document continues.

It will take time

It, however, stated that while the transition remains critical, it “will take some time” and as such, won’t involve the banning of combustion engine vehicles by 2035 unlike in the Europe.

“Transitioning towards low-emission vehicles will be a priority focus for the 2030s. The transition focus for the 2020s will be on shifting electrification towards clean energy and supporting energy security,” it says.

“An orderly yet urgent transition will thus secure established capabilities as illustrated by high export as a proportion of production, contribution to manufacturing employment, managerial capabilities, worker skill upgrading, and technology multipliers”.

According to Patel, “the success of the transition requires all stakeholders to continue to work collaboratively to navigate this challenging transition and transform it into an opportunity for growth, sustainability, and economic vitality”.

He, however, added that projections point to 2026 as being the year in which the first locally produced electric vehicle will be made, though stopped short of providing any further hints or details.

More details regarding funding will be announced in February next year when Finance Minister Enoch Godongwana presents his budget for the new year.

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