South Africa in danger of killing its car exports
The lack of government policy on electric vehicles (EVs) in South Africa, combined with challenging local conditions, makes it difficult for manufacturers in the country to secure international investment.
This is according to National Association of Automobile Manufacturers of South Africa (Naamsa) president Neale Hill, who said it is “extremely difficult” to sell South Africa as an investment destination.
Local auto manufacturers face a 2030 deadline, after which the exportation of internal combustion engine (ICE) vehicles to European markets will be banned.
However, the country’s rolling blackouts, debilitated rail and port services, and lack of clarity regarding state incentives hamstring vehicle manufacturers in South Africa.
Hill told the Sunday Times that the corporate head offices for manufacturers with operations in the country are not waiting for the South African government to provide clear EV policies.
“Original equipment manufacturers [OEMs] have been having a lot of very concerning discussions among ourselves and have been engaging with government to get some policy certainty in terms of where the industry is going,” he said.
He explained that the 2030 and 2035 deadlines regarding exports to Europe are of concern to the country’s manufacturers.
“We have a great level of concern related to what the future looks like in terms of South Africa’s ability to be an exporter of vehicles to these markets,” he said.
The deadlines specify that the export of ICE vehicles to the UK and Europe will be banned in 2030, after which the sale of ICE vehicles will be prohibited altogether by 2035.
Hill said that while it may seem like the deadlines are far off, South African manufacturers do not have much time when considering investment cycles and the decisions the auto industry needs to make.
Major OEMs in South Africa include BMW, Volkswagen, Toyota, Ford, and Mercedes-Benz, all of whom are waiting for clarity on the government’s incentives to start producing EVs.
Hill explained that given the uptake of EVs in European markets, South Africa is already behind, and the lack of government policy makes it hard to promote the country’s attractiveness as a manufacturing location for export purposes.
South Africa has had a slow uptake of electric vehicles, with only 92 sold in 2020. Sales increased in 2021, with 218 EVs sold in South Africa.
Naamsa data revealed that 205 electric cars had been sold in South Africa during the first half of 2022, meaning sales for the year will likely exceed previous years.
The slow uptake of EVs in South Africa is likely a result of the high prices caused by the country’s excessive taxes on electric car imports.
In February 2022, MyBroadband determined the cost of importing an electric bakkie to South Africa from the US.
Those importing electric vehicles to the country can expect to pay 30% ad valorem and 25% import tax, in addition to VAT charged on 10% of the vehicle’s value.
Our analysis found that South Africans would pay almost double the retail price when importing an electric bakkie to the country.
In combination, the cumulative taxes add R553,135 to the cost of the Ford F-150 lightning, meaning it would cost R1,172,460 to import.
The vehicle retailed at $39,974 (R689,000, excl. VAT and other taxes) in the US at the time.
Similarly, the Chevrolet Silverado EV will cost R552,112 more, and GMC’s Hummer EV2 Pickup will be R1,106,921 more to import than the recommended retail price.
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